Photo from Medienstürmer | Unsplash
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE
- A contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.
- Insurance is a contract whereby one party called the insurer undertakes for a consideration to pay another party called the insured, or his beneficiary, upon the happening of the peril insured against, whereby the party insured or his beneficiary suffers loss or damage or is exposed to liability.
The law says:
A contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. (Section 2(a), Republic Act No. 10607)
Basically, an insurance contract is a contract of indemnity. In it, one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.
What is the test to determine if a contract is an insurance contract?
Jurisprudence says:
The test to determine if a contract is an insurance contract or not, depends on the nature of the promise, the act required to be performed, and the exact nature of the agreement in the light of the occurrence, contingency, or circumstances under which the performance becomes requisite. It is not by what it is called. (White Gold Marine Services, Inc., vs. Pioneer Insurance and Surety Corporation, G.R. No. 154514. July 28, 2005)
What are the elements of an insurance contract?
Jurisprudence says:
An insurance contract exists where the following elements concur:
- The insured has an insurable interest;
- The insured is subject to a risk of loss by the happening of the designated peril;
- The insurer assumes the risk;
- Such assumption of risk is part of a general scheme to distribute actual losses among a large group of persons bearing a similar risk;
- In consideration of the insurer’s promise, the insured pays a premium. (Gulf Resorts, Inc. vs. Philippine Charter Insurance Corporation, G.R. NO. 156167, May 16, 2005)
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
All rights reserved.