I'm Giancarlo Enrico S. Pozon, a Wushu instructor, investor and Barrister... That's right, Barrister; I graduated from law school and took the Bar Exams, now I'm waiting for the results. I created this blog to make Philippine Law easy to understand for the average person. It's all about free legal advice. There are many law blogs. But the problem is that many of them are written for lawyers and law students. They use words that can't be understood by ordinary people.
Many lawyers, judges and law students consider themselves as superior to most human beings because of their knowledge of the law. It bothers me since the law is supposed to serve society. Since the law is meant to serve society as a whole, it is important that is must be understood by everybody.
This does not mean that we should all become lawyers. It means that although law is a highly specialized profession, the first duty of everybody in this profession is to make the law understandable to all; that's why all these articles are free legal advice.
Like I said, this blog is about law -but it's for the ordinary people, not the lawyers. It's for the ordinary folk so they will know what is good and bad for them, and that making them aware of the law will help us all improve society as a whole. This is free legal advice for everybody!
An insurance contract is an agreement where one person, for consideration, agrees to indemnify another against loss, damage or liability due to an unknown or contingent event. A contract of suretyship becomes an insurance contract if the surety is engaged in the insurance business.
It is a "risk-distributing device" because the insurer distributes the risk to a large number of insured who will all pay their contributions/premiums. The premiums will be used to pay for the losses.
It becomes a "risk-shifting device" if the insurer obliges himself to assume the risk of loss which the insured, who has an insurable interest, is subject to. The insurer, therefore, agrees to bear the burden of having to suffer the loss.
The Insurance Code classifies insurance contracts as either life, non-life or surety.
Life Insurance Policy
Insurance upon life is made payable on the death of the person, his surviving a specified period or otherwise contingently on the continuance or end of life.
1.) Ordinary
Premiums are regularly paid, usually on a yearly basis, throughout the insured's life. The beneficiary will be paid only when the insured dies. The policy may provide for a "cash surrender value," which is paid if the policy is cancelled, or a "loan value" that the insured can borrow.
2.) Limited
Premiums are paid only for an agreed period (ex. 5 years, etc.) The beneficiary is paid only when the insured dies. The premium payment is relatively higher than in an ordinary life policy.
3.) Term Insurance
Covers only an agreed limited term (ex. 20 years, etc.) The beneficiary will be paid only if the insured dies within the covered term; if he survives beyond the covered term, the contract is terminated. The premium is relatively higher than in 1 and 2.
4.) Endowment
Insurer will pay the insured if he survives an agreed period. If the insured dies within the period, the insurer will pay the beneficiary. This is usually availed of for retirement purposes. The premium payment is also relatively higher.
Non-life Insurance Policy
Also termed "property insurance." The insured is indemnified for loss due to damage to/destruction of his property or for damages he may be held legally liable as a result of injuries to other persons or damage to their property.
1.) Marine/transportation
Covers perils that may be encountered while the property is in transit and may include ocean marine insurance involving sea perils and inland marine insurance involving land transportation perils.
2.) Fire
The owner is indemnified for loss or damage to his property due to fire, earthquake, lightning windstorm and other allied risks.
3.) Casualty
Covers loss or liability due to accident or mishap but excludes those that fall under the other types of insurance contracts.
Surety
The surety guarantees the obligee the performance of the obligation/undertaking of the principal/obligor; this is because it's a collateral contract in relation to the principal one between the obligor and obligee. It includes official recognizances, bonds, undertakings or stipulations issued by any company.
The surety bond is the evidence of a contract of surety and the surety's liability is in solidum. The obligor is to execute an indemnity agreement to indemnify the surety against loss.
If an insurance company isn't authorized to issue surety bonds but it does so, it is estopped from claiming its lack of authority (Pryce vs. CA, 230 SCRA 164.)
The surety bond is the evidence of a contract of surety and the surety's liability is in solidum. The obligor is to execute an indemnity agreement to indemnify the surety against loss.
If an insurance company isn't authorized to issue surety bonds but it does so, it is estopped from claiming its lack of authority (Pryce vs. CA, 230 SCRA 164.)
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