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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. (Section 2 par. (a), Insurance Code)
- It is perfected by the meeting of the minds, or the concurrence of the offer and the acceptance with respect to the object and consideration constituting the contract.
- An application is a mere offer which requires the overt act of the insurer for it to ripen into a contract. (Virginia Perez v. Court of Appeals, G.R. No. 112329, January 28, 2000)
- Delay in acting on the application does not constitute acceptance even though the insured has forwarded his first premium with his application. (Virginia Perez v. Court of Appeals, G.R. No. 112329, January 28, 2000)
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 par. (a), R.A. No. 10607, or the Insurance Code)
An insurance contract is consensual. Thus, as with any other contract, it is perfected by the meeting of the minds, or the concurrence of the offer and the acceptance with respect to the object and consideration constituting the contract. An acceptance made by the insurer shall not bind the person making the offer except from the time it came to his knowledge.
In an insurance contract, “it should be noted that an application is a mere offer which requires the overt act of the insurer for it to ripen into a contract.” (Virginia Perez v. Court of Appeals, G.R. No. 112329, January 28, 2000)
Jurisprudence says:
“It should be noted that an application is a mere offer which requires the overt act of the insurer for it to ripen into a contract. Delay in acting on the application does not constitute acceptance even though the insured has forwarded his first premium with his application. The corporation may not be penalized for the delay in the processing of the application papers.” (Virginia Perez v. Court of Appeals, G.R. No. 112329, January 28, 2000)
Further, the Supreme Court ruled in the same case that:
“Mere delay by the insurer, although unreasonable, in action upon the application raises no implication of acceptance nor does it estop the insurer to deny the existence of the contract.” (Virginia Perez v. Court of Appeals, G.R. No. 112329, January 28, 2000)
Related article: Contents of an Insurance Policy
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