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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:
Life insurance refers to the insurance on human lives and insurance appertaining thereto or connected therewith. (Section 181, Insurance Code)
All other classes of insurance are considered non-life insurance. Non-life insurance, otherwise called general insurance, include property insurance, casualty insurance, compulsory insurance and microinsurance.
A contract of insurance is an agreement whereby the one (the insurer) undertakes for a consideration (the premium) to indemnify another (the insured) against loss, damage or liability arising from an unknown or contingent event. (Section 2, par. a, Insurance Code.)
Insurance contracts are classified according to the subject matter of the insurance and the risk insured against.
Republic Act No. 10607 or the Insurance Code of the Philippines defines life insurance as “insurance on human lives and insurance appertaining thereto or connected therewith.” (Section 181, Insurance Code)
The Insurance Code provides that:
“Every contract of undertaking for the payment of annuities including contracts for the payment of lump sums under a retirement program where a life insurance company manages or acts as a trustee for such retirement program shall be considered a life insurance contract for the purpose of this Code.” (Section 181, Insurance Code)
Moreover, “every contract or pledge for the payment of endowments or annuities shall be considered a life insurance contract for purposes of this Code.” (Section 182, Insurance Code)
All other classes of insurance are considered non-life insurance. Non-life insurance, otherwise called general insurance, include (1) property insurance, such as fire insurance, marine insurance, or suretyship; (2) casualty insurance; (3) compulsory insurance, which may be a Compulsory Motor Vehicle Liability Insurance or CMVLI, or a compulsory insurance coverage for agency-hired workers; and (4) microinsurance.
Property insurance includes insurance against fire, marine insurance, and suretyship.
Fire insurance refers to a contract by which the insurer for a consideration agrees to indemnify the insured against loss of, or damage to, property by hostile fire, including loss by lightning, windstorm, tornado, earthquake and other allied risks, when such risks are covered by extension to fire insurance policies or under separate policies.
The law says:
“[T]he term fire insurance shall include insurance against loss by fire, lightning, windstorm, tornado or earthquake and other allied risks, when such risks are covered by extension to fire insurance policies or under separate policies.” (Section 169, Insurance Code)
Marine insurance refers to an insurance against risks connected with navigation, to which a ship, cargo, freightage, profits, or other insurable interest in movable property may be exposed during a certain voyage or a fixed period of time.
The law says:
“Marine Insurance includes:
(a) Insurance against loss of or damage to:
(1) Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, securities, choses in action, instruments of debts, valuable papers, bottomry, and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to or in connection with any and all risks or perils of navigation, transit or transportation, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting shipment, or during any delays, storage, transhipment, or reshipment incident thereto, including war risks, marine builder’s risks, and all personal property floater risks;
(2) Person or property in connection with or appertaining to a marine, inland marine, transit or transportation insurance, including liability for loss of or damage arising out of or in connection with the construction, repair, operation, maintenance or use of the subject matter of such insurance (but not including life insurance or surety bonds nor insurance against loss by reason of bodily injury to any person arising out of ownership, maintenance, or use of automobiles);
(3) Precious stones, jewels, jewelry, precious metals, whether in course of transportation or otherwise; and
(4) Bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage); piers, wharves, docks and slips, and other aids to navigation and transportation, including dry docks and marine railways, dams and appurtenant facilities for the control of waterways.
(b) Marine protection and indemnity insurance, meaning insurance against, or against legal liability of the insured for loss, damage, or expense incident to ownership, operation, chartering, maintenance, use, repair, or construction of any vessel, craft or instrumentality in use of ocean or inland waterways, including liability of the insured for personal injury, illness or death or for loss of or damage to the property of another person.” (Section 101, Insurance Code)
Suretyship refers to an agreement whereby a party called the surety, guarantees the performance by another called the principal or obligor of an obligation or undertaking in favor of a third party called the obligee.
The law says:
“A contract of suretyship is an agreement whereby a party called the surety guarantees the performance by another party called the principal or obligor of an obligation or undertaking in favor of a third party called the obligee. It includes official recognizances, stipulations, bonds or undertakings issued by any company by virtue of and under the provisions of Act No. 536, as amended by Act No. 2206.” (Section 177, Insurance Code)
Casualty Insurance refers to the insurance covering loss or liability arising from accident or mishap, excluding those falling under other types of insurance such as fire or marine.
The law says:
“Casualty insurance is insurance covering loss or liability arising from accident or mishap, excluding certain types of loss which by law or custom are considered as falling exclusively within the scope of other types of insurance such as fire or marine. It includes, but is not limited to, employer’s liability insurance, motor vehicle liability insurance, plate glass insurance, burglary and theft insurance, personal accident and health insurance as written by non-life insurance companies, and other substantially similar kinds of insurance.” (Section 176, Insurance Code)
Compulsory Insurance may either be a Compulsory Motor Vehicle Liability Insurance (CMVLI) or compulsory insurance coverage for agency-hired workers.
Compulsory Motor Vehicle Liability Insurance refers to a special type of casualty insurance against passenger and third-party liability for death or bodily injuries and damage to property arising from motor vehicle accidents.
The law says:
“[Compulsory Motor Vehicle Liability Insurance] policy refers to a contract of insurance against passenger and third-party liability for death or bodily injuries and damage to property arising from motor vehicle accidents.” (Section 389, par. f, Insurance Code)
Compulsory insurance coverage for agency-hired workers refer to the insurance whereby each migrant worker deployed by a recruitment or manning agency is secured at no cost to such migrant worker effective for the duration of his/her employment.
Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, as amended by R.A. No. 10022, Section 37-A provides that:
Microinsurance refers to an activity providing specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune, and other contingent events.
The law says:
“Microinsurance is a financial product or service that meets the risk protection needs of the poor where:
(a) The amount of contributions, premiums, fees or charges, computed on a daily basis, does not exceed seven and a half percent (7.5%) of the current daily minimum wage rate for nonagricultural workers in Metro Manila; and
(b) The maximum sum of guaranteed benefits is not more than one thousand (1,000) times of the current daily minimum wage rate for nonagricultural workers in Metro Manila. (Section 187, Insurance Code)
TRIVIA: Did you know that the first week of October of every year is declared as “Life Insurance Consciousness Week” in the Philippines?
Read more here:
Life Insurance Consciousness Week
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.
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