1.

EXPLAIN THE CONCEPT OF INSURANCE

2. WHAT ARE THE ELEMENTS OF AN INSURANCE CONTRACT AND EXPLAIN
EACH
1) The insured possesses a interest of some kind susceptible of pecuniary
estimation, known as insurable interest
2) The insured is subject to risk of loss through the destruction or
impairment
3. EXPLAIN THE CHARACTERISTICS/NATURE OF INSURANCE CONTRACT
1) It is an aleatory
2) H
3) J
4)
4. CLASSES OF INSURANCE CONTRACTS AND EXPLAIN EACH
a. Marine
b. Fiasualty
c. Suretyship
d. Life
e. Compulsory Motor Vehicle Liability Insurance
5. INSURABLE INTEREST
1. Insurable Interest in Life/Health may consist in what?
(Sec 10) Every person has an insurable interest in the life and
health:
i. Of himself, of his spouse and of his children
ii. Of any person on whom he depends wholly or in part for
education or support, in whom he has a pecuniary interest;
iii. Of any person under a legal obligation to him for the payment
of money, or respecting property or services, of which death
or illness might delay or prevent the performance;
iv. Of any person upon whose life any estate or interest vested
in him depends.
2. Insurable Interest in Property Insurance may consist in what?
(Sec 14) Insurable interest in property may consist in
i. An existing interest which may be a legal title or equitable
title
ii. An inchoate interest founded on an existing interest
iii. An expectancy, coupled with an existing interest in that out
of which the expectancy arises
3. Explain Double Insurance and Over Insurance
(Sec 95) Double Insurance exists where the same person is
insured by several insurers separately in respect to the same
subject and interest. Double insurance is not contrary to law; the
insurers may thus be held liable up to the extent of the value of the
thing insured but not to exceed the amount of the policies issued.
The requisites of Double Insurance are:
1. The person insured is the same
2. Two or more insurers insuring separately
3. There is identity of subject matter
4. There is identity of interest insured
5. There is identity of risk or peril insured against.

Over Insurance exists where the insured obtains a policy in an

amount exceeding the value of his insurable interest. Since property
insurance is a contract of indemnity, in the event of loss, the
recovery will be limited to the value of the insureds insurable
interest. Moreover, there is no over insurance n life insurance
because no value could be placed on human life except when the
insurable interest of the insured is susceptible of pecuniary
estimation.
1. In double insurance, there must be two or more insurers while in
over insurance, one insurer is sufficient.
2. In double insurance, the total amount of the policies taken need
not exceed the value of insurable interest while in over
insurance, the insurance taken must always be more than the
amount of insurable.
4. Explain Multiple or Several Interest on Same Property
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6. PERFECTION OF THE CONTRACT OF INSURANCE. Explain the following:
1. Offer and Acceptance/Consensual
a.
Delay in Acceptance
b.
Delivery of Policy
2. Premium payment
3. Non-default Options in Life Insurance
4. Reinstatement of a Lapse Policy of Life Insurance
5. Refund of Premium when can it be invoked?
7. RESCISSION OF INSURANCE CONTRACTS. Explain the following:
a. Concealment
p. 45
(Sec 26) Concealment is a neglect to communicate that which a
party knows and ought to communicate. It is the intentional
withholding by the insured of any fact material to the risk.
(Sec 27) Concealment whether intentional or unintentional entitles
the injured party to rescind a contract of insurance.
(Sec 28) Each party of an insurance contract must communicate to
the other, in good faith, all facts within his knowledge which are
material to the contract and as to which he makes no warranty, and
which the other has not the means of ascertaining.
(Sec 31) Materiality is to be determined not by the event, but solely
by the probable and reasonable influence of the facts upon the
party to whom the communication is due, in forming his estimate of
the disadvantages f the proposed contract, or in making his
inquiries.
To be guilty of concealment, the party must have knowledge of the
fact concealed at the time of the effectivity of the policy. Even is a
party did not know of the existence of a material fact at the time of
its application, but acquired knowledge thereof after the application
but before the effectivity of the policy, he is guilty of concealment
should he fail to communicate such fact to the other.

b. Misrepresentation/Omissions
p. 56
Misrepresentation in insurance is a statement (1) as a fat of
something which is untrue, (2) which the insured stated with
knowledge that it is untrue and with an intent to deceive, or which
he states positively as true without knowing it to be true and which
has a tendency to mislead, and (3) where such fac in either case is
material to the risk.
c. Breach of Warranties
Warranty is a statement or promise by the insured contained in the
policy itself or incorporated in r attached to it by proper reference,
the falsity or nonfulfillment of which and regardless of whether or
not the insurer has suffered loss or prejudice as a result of falsity or
nonfulfillment, renders the policy voidable at the election of the
insurer.
[In other words, the contract of insurance is rendered voidable by
the insurer without reference to the materiality of the statement or
promise, and to whether the insurer was in fact, prejudiced by such
breach.
8. CLAIMS OF SETTLEMENT AND SUBROGATION. Explain the following:
a. Notice and Proof of Loss
b. Guidelines on Claims Settlement
1.
Unfair Claims Settlement; Sanction
2.
Prescription of Action
3.Subrogation