THE INSURANCE CODE (REPUBLIC ACT NO. 10607) Section 12.

Section 12. The interest of a beneficiary in a life insurance policy shall

be forfeited when the beneficiary is the principal, accomplice, or
AN ACT STRENGTHENING THE INSURANCE INDUSTRY, FURTHER accessory in willfully bringing about the death of the insured. In such
AMENDING PRESIDENTIAL DECREE NO. 612, OTHERWISE KNOWN a case, the share forfeited shall pass on to the other beneficiaries,
AS "THE INSURANCE CODE", AS AMENDED BY PRESIDENTIAL unless otherwise disqualified. In the absence of other beneficiaries,
DECREE NOS. 1141, 1280, 1455, 1460, 1814 AND 1981, AND BATAS the proceeds shall be paid in accordance with the policy contract. If
PAMBANSA BLG. 874, AND FOR OTHER PURPOSES the policy contract is silent, the proceeds shall be paid to the estate
of the insured.
Section 1. Presidential Decree No. 612, as amended, is hereby further Section 13. Every interest in property, whether real or personal, or
amended and shall be known as ‘The Insurance Code’. any relation thereto, or liability in respect thereof, of such nature that
Section 2. Whenever used in this Code, the following terms shall have a contemplated peril might directly damnify the insured, is an
the respective meanings hereinafter set forth or indicated, unless the insurable interest.
context otherwise requires: Section 14. An insurable interest in property may consist in:
a. An existing interest;
a. A contract of insurance is an agreement whereby one undertakes b. An inchoate interest founded on an existing interest; or
for a consideration to indemnify another against loss, damage or c. An expectancy, coupled with an existing interest in that out of
liability arising from an unknown or contingent event. which the expectancy arises.
A contract of suretyship shall be deemed to be an insurance
contract, within the meaning of this Code, only if made by a Section 15. A carrier or depository of any kind has an insurable
surety who or which, as such, is doing an insurance business as interest in a thing held by him as such, to the extent of his liability but
hereinafter provided. not to exceed the value thereof.
Section 16. A mere contingent or expectant interest in any thing, not
b. The term doing an insurance business or transacting an founded on an actual right to the thing, nor upon any valid contract
insurance business, within the meaning of this Code, shall for it, is not insurable.
include: Section 17. The measure of an insurable interest in property is the
1. Making or proposing to make, as insurer, any insurance extent to which the insured might be damnified by loss or injury
contract; thereof.
2. Making or proposing to make, as surety, any contract of
suretyship as a vocation and not as merely incidental to any Section 18. No contract or policy of insurance on property shall be
other legitimate business or activity of the surety; enforceable except for the benefit of some person having an
3. Doing any kind of business, including a reinsurance business, insurable interest in the property insured.
specifically recognized as constituting the doing of an Section 19. An interest in property insured must exist when the
insurance business within the meaning of this Code; insurance takes effect, and when the loss occurs, but need not exist
4. Doing or proposing to do any business in substance in the meantime; and interest in the life or health of a person insured
equivalent to any of the foregoing in a manner designed to must exist when the insurance takes effect, but need not exist
evade the provisions of this Code. thereafter or when the loss occurs.
In the application of the provisions of this Code, the fact that Section 20. Except in the cases specified in the next four sections, and
no profit is derived from the making of insurance contracts, in the cases of life, accident, and health insurance, a change of
agreements or transactions or that no separate or direct interest in any part of a thing insured unaccompanied by a
consideration is received therefor, shall not be deemed corresponding change of interest in the insurance, suspends the
conclusive to show that the making thereof does not insurance to an equivalent extent, until the interest in the thing and
constitute the doing or transacting of an insurance business. the interest in the insurance are vested in the same person.

c. As used in this Code, the term Commissioner means Section 21. A change of interest in a thing insured, after the
the Insurance Commissioner. occurrence of an injury which results in a loss, does not affect the
right of the insured to indemnity for the loss.
WHAT MAY BE INSURED Section 22. A change of interest in one or more of several distinct
Section 3. Any contingent or unknown evesnt, whether past or things, separately insured by one policy, does not avoid the insurance
future, which may damnify a person having an insurable interest, or as to the others.
create a liability against him, may be insured against, subject to the Section 23. A change of interest, by will or succession, on the death
provisions of this chapter. of the insured, does not avoid an insurance; and his interest in the
insurance passes to the person taking his interest in the thing insured.
The consent of the spouse is not necessary for the validity of an
insurance policy taken out by a married person on his or her life or Section 24. A transfer of interest by one of several partners, joint
that of his or her children. owners, or owners in common, who are jointly insured, to the others,
does not avoid an insurance even though it has been agreed that the
All rights, title and interest in the policy of insurance taken out by an insurance shall cease upon an alienation of the thing insured.
original owner on the life or health of the person insured shall Section 25. Every stipulation in a policy of insurance for the payment
automatically vest in the latter upon the death of the original owner, of loss whether the person insured has or has not any interest in the
unless otherwise provided for in the policy. property insured, or that the policy shall be received as proof of such
interest, and every policy executed by way of gaming or wagering, is
INSURABLE INTEREST void.
Section 10. Every person has an insurable interest in the life and
health: CONCEALMENT
a. Of himself, of his spouse and of his children; Section 26. A neglect to communicate that which a party knows and
b. Of any person on whom he depends wholly or in part for ought to communicate, is called a concealment.
education or support, or in whom he has a pecuniary interest; Section 27. A concealment whether intentional or unintentional
c. Of any person under a legal obligation to him for the payment of entitles the injured party to rescind a contract of insurance.
money, or respecting property or services, of which death or Section 28. Each party to a contract of insurance must communicate
illness might delay or prevent the performance; and to the other, in good faith, all facts within his knowledge which are
d. Of any person upon whose life any estate or interest vested in material to the contract and as to which he makes no warranty, and
him depends. which the other has not the means of ascertaining.
Section 29. An intentional and fraudulent omission, on the part of
Section 11. The insured shall have the right to change the beneficiary one insured, to communicate information of matters proving or
he designated in the policy, unless he has expressly waived this right tending to prove the falsity of a warranty, entitles the insurer to
in said policy. Notwithstanding the foregoing, in the event the insured rescind.
does not change the beneficiary during his lifetime, the designation
shall be deemed irrevocable.

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Section 30. Neither party to a contract of insurance is bound to THE POLICY
communicate information of the matters following, except in answer Section 49. The written instrument in which a contract of insurance
to the inquiries of the other: is set forth, is called a policy of insurance.
a. Those which the other knows; Section 50. The policy shall be in printed form which may contain
b. Those which, in the exercise of ordinary care, the other ought to blank spaces; and any word, phrase, clause, mark, sign, symbol,
know, and of which the former has no reason to suppose him signature, number, or word necessary to complete the contract of
ignorant; insurance shall be written on the blank spaces provided therein.
c. Those of which the other waives communication; Any rider, clause, warranty or endorsement purporting to be part of
d. Those which prove or tend to prove the existence of a risk the contract of insurance and which is pasted or attached to said
excluded by a warranty, and which are not otherwise material; policy is not binding on the insured, unless the descriptive title or
and name of the rider, clause, warranty or endorsement is also mentioned
e. Those which relate to a risk excepted from the policy and which and written on the blank spaces provided in the policy.
are not otherwise material. Unless applied for by the insured or owner, any rider, clause,
warranty or endorsement issued after the original policy shall be
Section 31. Materiality is to be determined not by the event, but countersigned by the insured or owner, which countersignature shall
solely by the probable and reasonable influence of the facts upon the be taken as his agreement to the contents of such rider, clause,
party to whom the communication is due, in forming his estimate of warranty or endorsement.
the disadvantages of the proposed contract, or in making his Notwithstanding the foregoing, the policy may be in electronic form
inquiries. subject to the pertinent provisions of Republic Act No. 8792,
Section 32. Each party to a contract of insurance is bound to know all otherwise known as the ‘Electronic Commerce Act’ and to such rules
the general causes which are open to his inquiry, equally with that of and regulations as may be prescribed by the Commissioner.
the other, and which may affect the political or material perils
contemplated; and all general usages of trade. Section 51. A policy of insurance must specify:
Section 33. The right to information of material facts may be waived, a. The parties between whom the contract is made;
either by the terms of insurance or by neglect to make inquiry as to b. The amount to be insured except in the cases of open or running
such facts, where they are distinctly implied in other facts of which policies;
information is communicated. c. The premium, or if the insurance is of a character where the exact
Section 34. Information of the nature or amount of the interest of premium is only determinable upon the termination of the
one insured need not be communicated unless in answer to an contract, a statement of the basis and rates upon which the final
inquiry, except as prescribed by Section 51. premium is to be determined;
Section 35. Neither party to a contract of insurance is bound to d. The property or life insured;
communicate, even upon inquiry, information of his own judgment e. The interest of the insured in property insured, if he is not the
upon the matters in question. absolute owner thereof;
f. The risks insured against; and
REPRESENTATION g. The period during which the insurance is to continue.
Section 36. A representation may be oral or written.
Section 37. A representation may be made at the time of, or before, Section 52. Cover notes may be issued to bind insurance temporarily
issuance of the policy. pending the issuance of the policy. Within sixty (60) days after issue
Section 38. The language of a representation is to be interpreted by of a cover note, a policy shall be issued in lieu thereof, including
the same rules as the language of contracts in general. within its terms the identical insurance bound under the cover note
Section 39. A representation as to the future is to be deemed a and the premium therefor.
promise, unless it appears that it was merely a statement of belief or Cover notes may be extended or renewed beyond such sixty (60) days
expectation. with the written approval of the Commissioner if he determines that
Section 40. A representation cannot qualify an express provision in a such extension is not contrary to and is not for the purpose of
contract of insurance, but it may qualify an implied warranty. violating any provisions of this Code. The Commissioner may
Section 41. A representation may be altered or withdrawn before the promulgate rules and regulations governing such extensions for the
insurance is effected, but not afterwards. purpose of preventing such violations and may by such rules and
Section 42. A representation must be presumed to refer to the date regulations dispense with the requirement of written approval by him
on which the contract goes into effect. in the case of extension in compliance with such rules and
regulations.
Section 43. When a person insured has no personal knowledge of a Section 53. The insurance proceeds shall be applied exclusively to the
fact, he may nevertheless repeat information which he has upon the proper interest of the person in whose name or for whose benefit it
subject, and which he believes to be true, with the explanation that is made unless otherwise specified in the policy.
he does so on the information of others; or he may submit the
information, in its whole extent, to the insurer; and in neither case is Section 54. When an insurance contract is executed with an agent or
he responsible for its truth, unless it proceeds from an agent of the trustee as the insured, the fact that his principal or beneficiary is the
insured, whose duty it is to give the information. real party in interest may be indicated by describing the insured as
Section 44. A representation is to be deemed false when the facts fail agent or trustee, or by other general words in the policy.
to correspond with its assertions or stipulations. Section 55. To render an insurance effected by one partner or part-
Section 45. If a representation is false in a material point, whether owner, applicable to the interest of his co-partners or other part-
affirmative or promissory, the injured party is entitled to rescind the owners, it is necessary that the terms of the policy should be such as
contract from the time when the representation becomes false. are applicable to the joint or common interest.
Section 46. The materiality of a representation is determined by the Section 56. When the description of the insured in a policy is so
same rules as the materiality of a concealment. general that it may comprehend any person or any class of persons,
only he who can show that it was intended to include him, can claim
Section 47. The provisions of this chapter apply as well to a the benefit of the policy.
modification of a contract of insurance as to its original formation.
Section 48. Whenever a right to rescind a contract of insurance is Section 57. A policy may be so framed that it will inure to the benefit
given to the insurer by any provision of this chapter, such right must of whomsoever, during the continuance of the risk, may become the
be exercised previous to the commencement of an action on the owner of the interest insured.
contract. Section 58. The mere transfer of a thing insured does not transfer the
policy, but suspends it until the same person becomes the owner of
After a policy of life insurance made payable on the death of the both the policy and the thing insured.
insured shall have been in force during the lifetime of the insured for Section 59. A policy is either open, valued or running.
a period of two (2) years from the date of its issue or of its last Section 60. An open policy is one in which the value of the thing
reinstatement, the insurer cannot prove that the policy is void ab insured is not agreed upon, and the amount of the insurance merely
initio or is rescindable by reason of the fraudulent concealment or represents the insurer’s maximum liability. The value of such thing
misrepresentation of the insured or his agent. insured shall be ascertained at the time of the loss.

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Section 61. A valued policy is one which expresses on its face an Section 76. A breach of warranty without fraud merely exonerates an
agreement that the thing insured shall be valued at a specific sum. insurer from the time that it occurs, or where it is broken in its
Section 62. A running policy is one which contemplates successive inception, prevents the policy from attaching to the risk.
insurances, and which provides that the object of the policy may be
from time to time defined, especially as to the subjects of insurance, PREMIUM
by additional statements or indorsements. Section 77. An insurer is entitled to payment of the premium as soon
Section 63. A condition, stipulation, or agreement in any policy of as the thing insured is exposed to the peril insured against.
insurance, limiting the time for commencing an action thereunder to Notwithstanding any agreement to the contrary, no policy or contract
a period of less than one (1) year from the time when the cause of of insurance issued by an insurance company is valid and binding
action accrues, is void. unless and until the premium thereof has been paid, except in the
case of a life or an industrial life policy whenever the grace period
Section 64. No policy of insurance other than life shall be cancelled provision applies, or whenever under the broker and agency
by the insurer except upon prior notice thereof to the insured, and agreements with duly licensed intermediaries, a ninety (90)-day
no notice of cancellation shall be effective unless it is based on the credit extension is given. No credit extension to a duly licensed
occurrence, after the effective date of the policy, of one or more of intermediary should exceed ninety (90) days from date of issuance of
the following: the policy.
a. Nonpayment of premium; Section 78. Employees of the Republic of the Philippines, including its
b. Conviction of a crime arising out of acts increasing the hazard political subdivisions and instrumentalities, and government-owned
insured against; or -controlled corporations, may pay their insurance premiums and
c. Discovery of fraud or material misrepresentation; loan obligations through salary deduction: Provided, That the
d. Discovery of willful or reckless acts or omissions increasing the treasurer, cashier, paymaster or official of the entity employing the
hazard insured against; government employee is authorized, notwithstanding the provisions
e. Physical changes in the property insured which result in the of any existing law, rules and regulations to the contrary, to make
property becoming uninsurable; deductions from the salary, wage or income of the latter pursuant to
f. Discovery of other insurance coverage that makes the total the agreement between the insurer and the government employee
insurance in excess of the value of the property insured; or and to remit such deductions to the insurer concerned, and collect
g. A determination by the Commissioner that the continuation of such reasonable fee for its services.
the policy would violate or would place the insurer in violation of
this Code. Section 79. An acknowledgment in a policy or contract of insurance
or the receipt of premium is conclusive evidence of its payment, so
Section 65. All notices of cancellation mentioned in the preceding far as to make the policy binding, notwithstanding any stipulation
section shall be in writing, mailed or delivered to the named insured therein that it shall not be binding until the premium is actually paid.
at the address shown in the policy, or to his broker provided the Section 80. A person insured is entitled to a return of premium, as
broker is authorized in writing by the policy owner to receive the follows:
notice of cancellation on his behalf, and shall state: a. To the whole premium if no part of his interest in the thing
a. Which of the grounds set forth in Section 64 is relied upon; and insured be exposed to any of the perils insured against;
b. That, upon written request of the named insured, the insurer will b. Where the insurance is made for a definite period of time and the
furnish the facts on which the cancellation is based. insured surrenders his policy, to such portion of the premium as
corresponds with the unexpired time, at a pro rata rate, unless a
Section 66. In case of insurance other than life, unless the insurer at short period rate has been agreed upon and appears on the face
least forty-five (45) days in advance of the end of the policy period of the policy, after deducting from the whole premium any claim
mails or delivers to the named insured at the address shown in the for loss or damage under the policy which has previously
policy notice of its intention not to renew the policy or to condition accrued: Provided, That no holder of a life insurance policy may
its renewal upon reduction of limits or elimination of coverages, the avail himself of the privileges of this paragraph without sufficient
named insured shall be entitled to renew the policy upon payment of cause as otherwise provided by law.
the premium due on the effective date of the renewal. Any policy
written for a term of less than one (1) year shall be considered as if Section 81. If a peril insured against has existed, and the insurer has
written for a term of one (1) year. Any policy written for a term longer been liable for any period, however short, the insured is not entitled
than one (1) year or any policy with no fixed expiration date shall be to return of premiums, so far as that particular risk is concerned.
considered as if written for successive policy periods or terms of one Section 82. A person insured is entitled to a return of the premium
(1) year. when the contract is voidable, and subsequently annulled under the
provisions of the Civil Code; or on account of the fraud or
WARRANTIES misrepresentation of the insurer, or of his agent, or on account of
Section 67. A warranty is either expressed or implied. facts, or the existence of which the insured was ignorant of without
Section 68. A warranty may relate to the past, the present, the future, his fault; or when by any default of the insured other than actual
or to any or all of these. fraud, the insurer never incurred any liability under the policy.
Section 69. No particular form of words is necessary to create a A person insured is not entitled to a return of premium if the policy is
warranty. annulled, rescinded or if a claim is denied by reason of fraud.
Section 70. Without prejudice to Section 51, every express warranty, Section 83. In case of an over insurance by several insurers other than
made at or before the execution of a policy, must be contained in the life, the insured is entitled to a ratable return of the premium,
policy itself, or in another instrument signed by the insured and proportioned to the amount by which the aggregate sum insured in
referred to in the policy as making a part of it. all the policies exceeds the insurable value of the thing at risk.
Section 71. A statement in a policy, of a matter relating to the person Section 84. An insurer may contract and accept payments, in addition
or thing insured, or to the risk, as fact, is an express warranty thereof. to regular premium, for the purpose of paying future premiums on
Section 72. A statement in a policy, which imparts that it is intended the policy or to increase the benefits thereof.
to do or not to do a thing which materially affects the risk, is a
warranty that such act or omission shall take place. LOSS
Section 73. When, before the time arrives for the performance of a Section 85. An agreement not to transfer the claim of the insured
warranty relating to the future, a loss insured against happens, or against the insurer after the loss has happened, is void if made before
performance becomes unlawful at the place of the contract, or the loss except as otherwise provided in the case of life insurance.
impossible, the omission to fulfill the warranty does not avoid the Section 86. Unless otherwise provided by the policy, an insurer is
policy. liable for a loss of which a peril insured against was the proximate
Section 74. The violation of a material warranty, or other material cause, although a peril not contemplated by the contract may have
provision of a policy, on the part of either party thereto, entitles the been a remote cause of the loss; but he is not liable for a loss of which
other to rescind. the peril insured against was only a remote cause.
Section 75. A policy may declare that a violation of specified Section 87. An insurer is liable where the thing insured is rescued
provisions thereof shall avoid it, otherwise the breach of an from a peril insured against that would otherwise have caused a loss,
immaterial provision does not avoid the policy. if, in the course of such rescue, the thing is exposed to a peril not

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insured against, which permanently deprives the insured of its MARINE INSURANCE
possession, in whole or in part; or where a loss is caused by efforts to Section 101. Marine Insurance includes:
rescue the thing insured from a peril insured against. a. Insurance against loss of or damage to:
Section 88. Where a peril is especially excepted in a contract of 1. Vessels, craft, aircraft, vehicles, goods, freights, cargoes,
insurance, a loss, which would not have occurred but for such peril, is merchandise, effects, disbursements, profits, moneys,
thereby excepted although the immediate cause of the loss was a securities, choses in action, instruments of debts, valuable
peril which was not excepted. papers, bottomry, and respondentia interests and all other
Section 89. An insurer is not liable for a loss caused by the willful act kinds of property and interests therein, in respect to,
or through the connivance of the insured; but he is not exonerated appertaining to or in connection with any and all risks or perils
by the negligence of the insured, or of the insurance agents or others. of navigation, transit or transportation, or while being
assembled, packed, crated, baled, compressed or similarly
NOTICE OF LOSS prepared for shipment or while awaiting shipment, or during
Section 90. In case of loss upon an insurance against fire, an insurer any delays, storage, transhipment, or reshipment incident
is exonerated, if written notice thereof be not given to him by an thereto, including war risks, marine builder’s risks, and all
insured, or some person entitled to the benefit of the insurance, personal property floater risks;
without unnecessary delay. For other non-life insurance, the 2. Person or property in connection with or appertaining to a
Commissioner may specify the period for the submission of the notice marine, inland marine, transit or transportation insurance,
of loss. including liability for loss of or damage arising out of or in
Section 91. When a preliminary proof of loss is required by a policy, connection with the construction, repair, operation,
the insured is not bound to give such proof as would be necessary in maintenance or use of the subject matter of such insurance
a court of justice; but it is sufficient for him to give the best evidence (but not including life insurance or surety bonds nor insurance
which he has in his power at the time. against loss by reason of bodily injury to any person arising
Section 92. All defects in a notice of loss, or in preliminary proof out of ownership, maintenance, or use of automobiles);
thereof, which the insured might remedy, and which the insurer 3. Precious stones, jewels, jewelry, precious metals, whether in
omits to specify to him, without unnecessary delay, as grounds of course of transportation or otherwise; and
objection, are waived. 4. Bridges, tunnels and other instrumentalities of transportation
and communication (excluding buildings, their furniture and
Section 93. Delay in the presentation to an insurer of notice or proof furnishings, fixed contents and supplies held in storage);
of loss is waived if caused by any act of him, or if he omits to take piers, wharves, docks and slips, and other aids to navigation
objection promptly and specifically upon that ground. and transportation, including dry docks and marine railways,
Section 94. If the policy requires, by way of preliminary proof of loss, dams and appurtenant facilities for the control of waterways.
the certificate or testimony of a person other than the insured, it is
sufficient for the insured to use reasonable diligence to procure it, b. Marine protection and indemnity insurance, meaning insurance
and in case of the refusal of such person to give it, then to furnish against, or against legal liability of the insured for loss, damage,
reasonable evidence to the insurer that such refusal was not induced or expense incident to ownership, operation, chartering,
by any just grounds of disbelief in the facts necessary to be certified maintenance, use, repair, or construction of any vessel, craft or
or testified. instrumentality in use of ocean or inland waterways, including
liability of the insured for personal injury, illness or death or for
DOUBLE INSURANCE loss of or damage to the property of another person.
Section 95. A double insurance exists where the same person is
insured by several insurers separately in respect to the same subject FIRE INSURANCE
and interest. Section 169. As used in this Code, the term fire insurance shall include
Section 96. Where the insured in a policy other than life is over insurance against loss by fire, lightning, windstorm, tornado or
insured by double insurance: earthquake and other allied risks, when such risks are covered by
a. The insured, unless the policy otherwise provides, may claim extension to fire insurance policies or under separate policies.
payment from the insurers in such order as he may select, up to Section 170. An alteration in the use or condition of a thing insured
the amount for which the insurers are severally liable under their from that to which it is limited by the policy made without the
respective contracts; consent of the insurer, by means within the control of the insured,
b. Where the policy under which the insured claims is a valued and increasing the risks, entitles an insurer to rescind a contract of
policy, any sum received by him under any other policy shall be fire insurance.
deducted from the value of the policy without regard to the Section 171. An alteration in the use or condition of a thing insured
actual value of the subject matter insured; from that to which it is limited by the policy, which does not increase
c. Where the policy under which the insured claims is an unvalued the risk, does not affect a contract of fire insurance.
policy, any sum received by him under any policy shall be Section 172. A contract of fire insurance is not affected by any act of
deducted against the full insurable value, for any sum received by the insured subsequent to the execution of the policy, which does not
him under any policy; violate its provisions, even though it increases the risk and is the
d. Where the insured receives any sum in excess of the valuation in cause of the loss.
the case of valued policies, or of the insurable value in the case of
unvalued policies, he must hold such sum in trust for the insurers, Section 173. If there is no valuation in the policy, the measure of
according to their right of contribution among themselves; indemnity in an insurance against fire is the expense it would be to
e. Each insurer is bound, as between himself and the other insurers, the insured at the time of the commencement of the fire to replace
to contribute ratably to the loss in proportion to the amount for the thing lost or injured in the condition in which it was at the time of
which he is liable under his contract. the injury; but if there is a valuation in a policy of fire insurance, the
effect shall be the same as in a policy of marine insurance.
REINSURANCE
Section 97. A contract of reinsurance is one by which an insurer Section 174. Whenever the insured desires to have a valuation
procures a third person to insure him against loss or liability by reason named in his policy, insuring any building or structure against fire, he
of such original insurance. may require such building or structure to be examined by an
Section 98. Where an insurer obtains reinsurance, except under independent appraiser and the value of the insured’s interest therein
automatic reinsurance treaties, he must communicate all the may then be fixed as between the insurer and the insured. The cost
representations of the original insured, and also all the knowledge of such examination shall be paid for by the insured. A clause shall be
and information he possesses, whether previously or subsequently inserted in such policy stating substantially that the value of the
acquired, which are material to the risk. insured’s interest in such building or structure has been thus fixed. In
Section 99. A reinsurance is presumed to be a contract of indemnity the absence of any change increasing the risk without the consent of
against liability, and not merely against damage. the insurer or of fraud on the part of the insured, then in case of a
Section 100. The original insured has no interest in a contract of total loss under such policy, the whole amount so insured upon the
reinsurance. insured’s interest in such building or structure, as stated in the policy
upon which the insurers have received a premium, shall be paid, and

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in case of a partial loss the full amount of the partial loss shall be so In the absence of a judicial guardian, the father, or in the latter’s
paid, and in case there are two (2) or more policies covering the absence or incapacity, the mother, of any minor, who is an insured or
insured’s interest therein, each policy shall contribute pro rata to the a beneficiary under a contract of life, health, or accident insurance,
payment of such whole or partial loss. But in no case shall the insurer may exercise, in behalf of said minor, any right under the policy,
be required to pay more than the amount thus stated in such policy. without necessity of court authority or the giving of a bond, where
This section shall not prevent the parties from stipulating in such the interest of the minor in the particular act involved does not
policies concerning the repairing, rebuilding or replacing of buildings exceed Five hundred thousand pesos (P500,000.00) or in such
or structures wholly or partially damaged or destroyed. reasonable amount as may be determined by the Commissioner.
Such right may include, but shall not be limited to, obtaining a policy
Section 175. No policy of fire insurance shall be pledged, loan, surrendering the policy, receiving the proceeds of the Policy,
hypothecated, or transferred to any person, firm or company who and giving the minor’s consent to any transaction on the policy.
acts as agent for or otherwise represents the issuing company, and In the absence or in case of the incapacity of the father or mother,
any such pledge, hypothecation, or transfer hereafter made shall be the grandparent, the eldest brother or sister at least eighteen (18)
void and of no effect insofar as it may affect other creditors of the years of age, or any relative who has actual custody of the minor
insured. insured or beneficiary, shall act as a guardian without need of a court
order or judicial appointment as such guardian, as long as such person
CASUALTY INSURANCE is not otherwise disqualified or incapacitated. Payment made by the
Section 176. Casualty insurance is insurance covering loss or liability insurer pursuant to this section shall relieve such insurer of any
arising from accident or mishap, excluding certain types of loss which liability under the contract.
by law or custom are considered as falling exclusively within the
scope of other types of insurance such as fire or marine. It includes, Section 183. The insurer in a life insurance contract shall be liable in
but is not limited to, employer’s liability insurance, motor vehicle case of suicide only when it is committed after the policy has been in
liability insurance, plate glass insurance, burglary and theft insurance, force for a period of two (2) years from the date of its issue or of its
personal accident and health insurance as written by non-life last reinstatement, unless the policy provides a shorter
insurance companies, and other substantially similar kinds of period: Provided, however, That suicide committed in the state of
insurance. insanity shall be compensable regardless of the date of commission.
Section 184. A policy of insurance upon life or health may pass by
SURETYSHIP transfer, will or succession to any person, whether he has an
Section 177. A contract of suretyship is an agreement whereby a insurable interest or not, and such person may recover upon it
party called the surety guarantees the performance by another party whatever the insured might have recovered.
called the principal or obligor of an obligation or undertaking in favor Section 185. Notice to an insurer of a transfer or bequest thereof is
of a third party called the obligee. It includes official recognizances, not necessary to preserve the validity of a policy of insurance upon
stipulations, bonds or undertakings issued by any company by virtue life or health, unless thereby expressly required.
of and under the provisions of Act No. 536, as amended by Act No. Section 186. Unless the interest of a person insured is susceptible of
2206. exact pecuniary measurement, the measure of indemnity under a
Section 178. The liability of the surety or sureties shall be joint and policy of insurance upon life or health is the sum fixed in the policy.
several with the obligor and shall be limited to the amount of the
bond. It is determined strictly by the terms of the contract of MICROINSURANCE
suretyship in relation to the principal contract between the obligor Section 187. Microinsurance is a financial product or service that
and the obligee. meets the risk protection needs of the poor where:
a. The amount of contributions, premiums, fees or charges,
Section 179. The surety is entitled to payment of the premium as computed on a daily basis, does not exceed seven and a half
soon as the contract of suretyship or bond is perfected and delivered percent (7.5%) of the current daily minimum wage rate for
to the obligor. No contract of suretyship or bonding shall be valid and nonagricultural workers in Metro Manila; and
binding unless and until the premium therefor has been paid, except b. The maximum sum of guaranteed benefits is not more than one
where the obligee has accepted the bond, in which case the bond thousand (1,000) times of the current daily minimum wage rate
becomes valid and enforceable irrespective of whether or not the for nonagricultural workers in Metro Manila.
premium has been paid by the obligor to the surety: Provided, That if
the contract of suretyship or bond is not accepted by, or filed with Section 188. No insurance company or mutual benefit association
the obligee, the surety shall collect only a reasonable amount, not shall engage in the business of microinsurance unless it possesses all
exceeding fifty percent (50%) of the premium due thereon as service the requirements as may be prescribed by the Commissioner. The
fee plus the cost of stamps or other taxes imposed for the issuance of Commissioner shall issue such rules and regulations governing
the contract or bond: Provided, however, That if the nonacceptance microinsurance.
of the bond be due to the fault or negligence of the surety, no such
service fee, stamps or taxes shall be collected. CLAIMS SETTLEMENT
Section 247.
In the case of a continuing bond, the obligor shall pay the subsequent a. No insurance company doing business in the Philippines shall
annual premium as it falls due until the contract of suretyship is refuse, without just cause, to pay or settle claims arising under
cancelled by the obligee or by the Commissioner or by a court of coverages provided by its policies, nor shall any such company
competent jurisdiction, as the case may be. engage in unfair claim settlement practices. Any of the following
acts by an insurance company, if committed without just cause
Section 180. Pertinent provisions of the Civil Code of the Philippines and performed with such frequency as to indicate a general
shall be applied in a suppletory character whenever necessary in business practice, shall constitute unfair claim settlement
interpreting the provisions of a contract of suretyship. practices:
1. Knowingly misrepresenting to claimants pertinent facts or
LIFE INSURANCE policy provisions relating to coverage at issue;
Section 181. Life insurance is insurance on human lives and insurance 2. Failing to acknowledge with reasonable promptness
appertaining thereto or connected therewith. pertinent communications with respect to claims arising
Every contract or undertaking for the payment of annuities including under its policies;
contracts for the payment of lump sums under a retirement program 3. Failing to adopt and implement reasonable standards for the
where a life insurance company manages or acts as a trustee for such prompt investigation of claims arising under its policies;
retirement program shall be considered a life insurance contract for 4. Not attempting in good faith to effectuate prompt, fair and
purposes of this Code. equitable settlement of claims submitted in which liability has
Section 182. An insurance upon life may be made payable on the become reasonably clear; or
death of the person, or on his surviving a specified period, or 5. Compelling policyholders to institute suits to recover
otherwise contingently on the continuance or cessation of life. amounts due under its policies by offering without justifiable
Every contract or pledge for the payment of endowments or annuities reason substantially less than the amounts ultimately
shall be considered a life insurance contract for purposes of this Code. recovered in suits brought by them.

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 Bangko Sentral ng Pilipinas may promulgate. To engage in
b. Evidence as to numbers and types of valid and justifiable bancassurance arrangement, a bank is not required to have equity
complaints to the Commissioner against an insurance company, ownership of the insurance company. No insurance company shall
and the Commissioner’s complaint experience with other enter into a bancassurance arrangement unless it possesses all the
insurance companies writing similar lines of insurance shall be requirements as may be prescribed by the Commissioner and the
admissible in evidence in an administrative or judicial proceeding Bangko Sentral ng Pilipinas.
brought under this section.
No insurance product under this section, whether life or non-life,
c. If it is found, after notice and an opportunity to be heard, that an shall be issued or delivered unless in the form previously approved by
insurance company has violated this section, each instance of the Commissioner.
noncompliance with paragraph (a) may be treated as a separate
violation of this section and shall be considered sufficient cause Section 376. Personnel tasked to present and sell insurance products
for the suspension or revocation of the company’s certificate of within the bank premises shall be duly licensed by the Commissioner
authority. and shall be subject to the rules and regulations of this Act.

Section 248. The proceeds of a life insurance policy shall be paid Section 377. The Commissioner and the Bangko Sentral ng Pilipinas
immediately upon maturity of the policy, unless such proceeds are shall promulgate rules and regulations to effectively supervise the
made payable in installments or as an annuity, in which case the business of bancassurance.
installments, or annuities shall be paid as they become due: Provided,
however, That in the case of a policy maturing by the death of the Section 439. The Commissioner shall have the power to adjudicate
insured, the proceeds thereof shall be paid within sixty (60) days after claims and complaints involving any loss, damage or liability for which
presentation of the claim and filing of the proof of death of the an insurer may be answerable under any kind of policy or contract of
insured. Refusal or failure to pay the claim within the time prescribed insurance, or for which such insurer may be liable under a contract of
herein will entitle the beneficiary to collect interest on the proceeds suretyship, or for which a reinsurer may be sued under any contract
of the policy for the duration of the delay at the rate of twice the of reinsurance it may have entered into; or for which a mutual benefit
ceiling prescribed by the Monetary Board, unless such failure or association may be held liable under the membership certificates it
refusal to pay is based on the ground that the claim is fraudulent. has issued to its members, where the amount of any such loss,
The proceeds of the policy maturing by the death of the insured damage or liability, excluding interest, cost and attorney’s fees, being
payable to the beneficiary shall include the discounted value of all claimed or sued upon any kind of insurance, bond, reinsurance
premiums paid in advance of their due dates, but are not due and contract, or membership certificate does not exceed in any single
payable at maturity. claim Five million pesos (P5,000,000.00).

Section 249. The amount of any loss or damage for which an insurer The power of the Commissioner does not cover the relationship
may be liable, under any policy other than life insurance policy, shall between the insurance company and its agents/brokers but is limited
be paid within thirty (30) days after proof of loss is received by the to adjudicating claims and complaints filed by the insured against the
insurer and ascertainment of the loss or damage is made either by insurance company.
agreement between the insured and the insurer or by arbitration; but
if such ascertainment is not had or made within sixty (60) days after The Commissioner may authorize any officer or group of officers
such receipt by the insurer of the proof of loss, then the loss or under him to conduct investigation, inquiry and/or hearing and
damage shall be paid within ninety (90) days after such receipt. decide claims and he may issue rules governing the conduct of
Refusal or failure to pay the loss or damage within the time adjudication and resolution of cases. The Rules of Court shall have
prescribed herein will entitle the assured to collect interest on the suppletory application.
proceeds of the policy for the duration of the delay at the rate of
twice the ceiling prescribed by the Monetary Board, unless such The party filing an action pursuant to the provisions of this section
failure or refusal to pay is based on the ground that the claim is thereby submits his person to the jurisdiction of the Commissioner.
fraudulent. The Commissioner shall acquire jurisdiction over the person of the
impleaded party or parties in accordance with and pursuant to the
Section 250. In case of any litigation for the enforcement of any policy provisions of the Rules of Court.
or contract of insurance, it shall be the duty of the Commissioner or
the Court, as the case may be, to make a finding as to whether the The authority to adjudicate granted to the Commissioner under this
payment of the claim of the insured has been unreasonably denied or section shall be concurrent with that of the civil courts, but the filing
withheld; and in the affirmative case, the insurance company shall be of a complaint with the Commissioner shall preclude the civil courts
adjudged to pay damages which shall consist of attorney’s fees and from taking cognizance of a suit involving the same subject matter.
other expenses incurred by the insured person by reason of such Any decision, order or ruling rendered by the Commissioner after a
unreasonable denial or withholding of payment plus interest of twice hearing shall have the force and effect of a judgment. Any party may
the ceiling prescribed by the Monetary Board of the amount of the appeal from a final order, ruling or decision of the Commissioner by
claim due the insured, from the date following the time prescribed in filing with the Commissioner within thirty (30) days from receipt of
Section 248 or in Section 249, as the case may be, until the claim is copy of such order, ruling or decision a notice of appeal to the Court
fully satisfied: Provided, That failure to pay any such claim within the of Appeals in the manner provided for in the Rules of Court for
time prescribed in said sections shall be considered prima appeals from the Regional Trial Court to the Court of Appeals.
facie evidence of unreasonable delay in payment.
For the purpose of any proceeding under this section, the
Section 251. It is unlawful to: Commissioner, or any officer thereof designated by him is
a. Present or cause to be presented any fraudulent claim for the empowered to administer oaths and affirmation, subpoena
payment of a loss under a contract of insurance; and witnesses, compel their attendance, take evidence, and require the
b. Fraudulently prepare, make or subscribe any writing with intent production of any books, papers, documents, or contracts or other
to present or use the same, or to allow it to be presented in records which are relevant or material to the inquiry.
support of any such claim. Any person who violates this section
shall be punished by a fine not exceeding twice the amount A full and complete record shall be kept of all proceedings had before
claimed or imprisonment of two (2) years, or both, at the the Commissioner, or the officers thereof designated by him, and all
discretion of the court. testimony shall be taken down and transcribed by a stenographer
appointed by the Commissioner.
BANCASSURANCE
Section 375. The term bancassurance shall mean the presentation In order to promote party autonomy in the resolution of cases, the
and sale to bank customers by an insurance company of its insurance Commissioner shall establish a system for resolving cases through the
products within the premises of the head office of such bank duly use of alternative dispute resolution.
licensed by the Bangko Sentral ng Pilipinas or any of its branches
under such rules and regulations which the Commissioner and the --End--

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