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Carlos Part: RA 10607 The Insurance Code 1. What Is The Basic Concept of Insurance?

The document discusses key concepts in insurance contracts and policies. It defines insurance as a cooperative device to spread risk over multiple individuals exposed to the same risks. An insurance business involves making insurance contracts and proposals as an insurer or surety. The key elements of an insurance contract include consent, consideration in the form of premiums paid, and indemnification against specified risks. The parties are the insurer, who agrees to indemnify losses, and the insured, who is indemnified and pays premiums, with beneficiaries receiving payouts. For a person to be insured, they must be competent, possess an insurable interest, and not be a public enemy of the country.

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148 views2 pages

Carlos Part: RA 10607 The Insurance Code 1. What Is The Basic Concept of Insurance?

The document discusses key concepts in insurance contracts and policies. It defines insurance as a cooperative device to spread risk over multiple individuals exposed to the same risks. An insurance business involves making insurance contracts and proposals as an insurer or surety. The key elements of an insurance contract include consent, consideration in the form of premiums paid, and indemnification against specified risks. The parties are the insurer, who agrees to indemnify losses, and the insured, who is indemnified and pays premiums, with beneficiaries receiving payouts. For a person to be insured, they must be competent, possess an insurable interest, and not be a public enemy of the country.

Uploaded by

Roylyn Joy Carlos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CARLOS PART

RA 10607
THE INSURANCE CODE

1. What is the basic concept of insurance?


- Insurance is a means by which one seeks to be covered against the consequences of an
event that may cause loss or damage. The concept is that the premiums that are paid are
accumulated in a pool from which payment of claims are to be obtained. As a basis, it is
assumed that the people contributing premiums are in excess of those making claims
resulting in a larger pool of money than the amounts being claimed. Insurance is a
matter of addressing risks (risks we can live with and risks we cannot live with).

2. Define insurance.
- Insurance is defined as a co-operative device to spread the loss caused by a particular
risk over a number of persons who are exposed to it and who agree to ensure themselves
against that risk.

3. Explain the term “doing an insurance business or transacting an insurance business.”


- The term doing an insurance business or transacting an insurance business, within the
meaning of this Code, shall include:
a. Making or proposing to make, as insurer, any insurance contract;
b. Making or proposing to make, as surety, any contract of suretyship as a vocation and
not as merely incidental to any other legitimate business or activity of the surety;
c. Doing any kind of business, including a reinsurance business, specifically recognized
as constituting the doing of an insurance business within the meaning of this Code;
d. Doing or proposing to do any business in substance equivalent to any of the
foregoing in a manner designed to evade the provisions of this Code.
- In the application of the provisions of this Code, the fact that no profit is derived from the
making of insurance contracts, agreements or transactions or that no separate or direct
consideration is received therefor, shall not be deemed conclusive to show that the
making thereof does not constitute the doing or transacting of an insurance business.

4. What are the elements of an insurance contract?


- Like any other contract, an insurance contract must have consent of the parties, object
and cause or consideration.
a. The parties who give their consent in this contract are the insurer and insured. 
b. The object of the contract is the transferring or distributing of the risk of loss,
damage, liability or disability from the insured to the insurer. 
c. The cause or consideration of the contract is the premium which the insured pays the
insurer.
- The other elements required are specific to insurance contracts:
a. Indemnity.
CARLOS PART
b. Insurable Interest.
c. Utmost Good Faith.
d. Subrogation.
e. Assignment and nomination.
f. Warranties.
g. Proximate Cause.
h. Return of Premium.
- Additional Element of an Insurance Contract
 Insurable Interest - This means that the insured possesses an interest of some kind
susceptible of pecuniary estimation.

5. Who are the parties to the contract of insurance?


a. INSURER – Every person, partnership, association or corporation duly authorized to
transact insurance business as provided in the Code may be an insurer. H is the party
who agrees to indemnify another upon the happening of specified contingency.
b. INSURED – Party to be indemnified in case of a loss. Anyone except a public enemy (is
a nation at war with the Philippines and every citizen or subject of such nation) may be
insured. The purpose of war is to cripple the power and exhaust the resources of the
enemy, and it is inconsistent to destroy its resources then pay it the value of what has
been destroyed.
c. BENEFICIARY – the person who receives the benefits of an insurance policy upon its
maturity.

6. What are the requisites in order that a person may be insured in a contact of
insurance?
a. He must be competent to enter into a contract.
b. He must possess an insurable interest in the subject of insurance.
c. He must NOT be a public enemy.

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