INSURANCE LAW PERSONAL REVIEWER ATTY.

JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]

FINAL EXAM COVERAGE

SECTION 11

Section 11. The insured shall have the right to change the beneficiary he
designated in the policy, unless he has expressly waived this right in said
policy. Notwithstanding the foregoing, in the event the insured does not
change the beneficiary during his lifetime, the designation shall be deemed
irrevocable.

BENEFICIARY - It refers to the person who is named or designated in a

contract of life, health or accident insurance as the one who is to receive the
benefits upon the death of the insured.

KINDS OF BENEFICIARY

The beneficiary in a life insurance policy may be the insurer himself or his
personal representatives or someone other than the insured. Where the
beneficiary is other than the insured, such person may occupy one of the
three relations to the insured:

1. Insured himself
2. Third person who paid a consideration
3. Third person through mere bounty of insured

Insured himself

 He may himself be the person who procures the contract and pays the
premiums necessary to maintain it. Such a person is thus an
immediate party to the contract and is ordinarily called the assured,
as where the creditor insures the life of his debtor

Third person who paid a consideration

 The third person named as the beneficiary may have paid a valuable
consideration for his selection.

Example: The insured may have taken the policy for the benefit
of a creditor or to secure some other obligations

Third person through mere bounty of insured

 The beneficiary designated may be the estate of the insured or a third

party.

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]
NOTE: In the second and third cases, the beneficiary is not a party to the
contract. In all the three cases, the proceeds of the life insurance become
the exclusive property of the beneficiary upon the death of the insured.
LIMITATIONS IN THE APPOINTMENT OF BENEFICIARY

A person may take out a policy on his own life payable to whoever provided that he acts in good faith and without intent to make
the transaction merely a cover for a forbidden wagering contract. The limitation of the Civil Code is found in Articles 2012 and 739.

1. Article 2012

Any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life
insurance policy by the person who cannot make any donation to him, according to the said article.

2. Article 739

The following donations shall be void:

1. Those made between persons who were guilty of adultery or concubinage at the time of the donation
2. Those made between persons found guilty of the same criminal offense, in consideration thereof
3. Those made to public officer or his wife, descendants and ascendants, by reason of his office

NOTE: In order that Article 739 may apply, it is not required that there be a previous conviction for adultery or concubinage. This
can be inferred from the clause that “guilt of the donor and done may be proved by preponderance of evidence.”

RIGHT OF INSURED TO CHANGE BENEFICIARY IN LIFE INSURANCE

General rule : Whether or not the policy reserves to the insured the right to change the beneficiary, he has the power to change
the beneficiary without the consent of the latter who acquires no vested right but only an expectancy of receiving the proceeds
under the insurance.

Effect of death of insured

The insured’s power to extinguish the beneficiary’s interest ceases at his death and cannot be exercised by his personal
representative or assignee.

Where right to change is waived

If it is expressly waived, then the insured has no power to make such change without the consent of the beneficiary.

The beneficiary acquires an absolute and vested interest to all benefits accruing to the policy. A new beneficiary cannot be added as
it will reduce the latter’s vested rights. The insured cannot destroy the contract by refusing to pay the premiums for the beneficiary
can protect his interest by paying the premiums.

MEASUREMENT OF VESTED INTEREST OF BENEFICIARY ON POLICY

It should be measured on its full face value and not on its cash surrender value for in case of death of the insured, said beneficiary
is paid on the basis of its face value. In case the insured should discontinue to pay the premiums, the beneficiary may continue
paying it and is entitled to automatic extended term, or paid-up insurance options, etc., and that said vested right under the policy
cannot be divisible at any given time.

WHERE BENEFICIARY DIES BEFORE THE INSURED If the beneficiary is revocable

The heirs of the insured will be entitled to the proceeds of the insurance.

If the beneficiary is irrevocable

There are two views.

1. Beneficiary’s representative is entitled to insurance proceeds – it would necessarily follow as a consequence of the vested interest
rule, where the right to change the designated beneficiary is expressly waived, if the beneficiary dies before the insured, his rights
so vested should pass to his representatives.

2. Estate of the insured is entitled to insurance proceeds – because the deceased scarcely have intended to make a provision for the
heirs of the deceased beneficiary, who may be persons without claim to his bounty or interest in his life.

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]
Important: According to sir, the second view is better.

DESIGNATION OF BENEFICIARY

Words used in designating the beneficiaries of a life policy will not be given their technical significance but will be construed broadly
in order that the benefit of the insurance shall be received by those intended by the insured as the object of his bounty.

Children

It includes an adopted child, an adult child not forming part of the household, after-born children even of a marriage subsequently
contracted. This never intended to include grandchildren.

Where the children are named individually, other children cannot share in the insurance proceeds unless the insured subsequently
amended his designation to include them.

Husband; wife or widow

This is a descriptio personae and the fact that one who otherwise answers the description does not have a legal status of a
wife/husband of the insured does not prevent her from taking as beneficiary, as when she is designated by name although the
words “his wife” or “her husband” are added.

However, if the beneficiary is not name and only designated as “wife” or “husband”, the legal person as ascertained at the death of
the insured is entitled to the benefits.

Husband and children; wife and children

The policy which designates the wife of the insured and “their children” includes children by another wife, although the prevailing
view state that the beneficiaries are limited to children common to both. But if the designation is made to the insured’s “wife and
children” or “my wife and children,” the insurance is deemed for the benefit of all children of the insured, whether by the named
wife or those of another.

Family

The court will ascertain whether that person was so regarded by the insured.

Heirs or legal heirs

It includes a class of persons who would take the property of the insured in case he died intestate. It is generally held that the
widow of the deceased in entitled to take under a policy payable to his “heirs” or “legal heirs” as well as the children of the
deceased.

Estate or legal representatives of deceased

Must be construed in their strict technical sense and the courts will ordinarily assume that they are used to mean executors or
administrators unless it appears that the deceased intended to use these expressions in the sense of heir or next of kin.

TN: If no beneficiary is designated in the life insurance policy, the proceeds will go to his legal heirs in accordance with law.

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 accessory in willfully bringing about the death of the insured. In such a case, the share forfeited shall pass on to the other
beneficiaries, unless otherwise disqualified. In the absence of other beneficiaries, the proceeds shall be paid in accordance with the
policy contract. If the policy contract is silent, the proceeds shall be paid to the estate of the insured.

FORFEITURE OF THE INTEREST OF THE BENEFICIARY IN A LIFE INSURANCE POLICY

“Interest”, how construed

The word “interest” in this section means the right of the beneficiary to receive the proceeds of the life insurance policy. It does not
mean insurable interest since the beneficiary need not have an insurable interest in the life of the insured.

OTHER QUALIFIED BENEFICIARIES OF THE INSURED

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]
In case the interest of the beneficiary is forfeited, the nearest relatives, not otherwise disqualified, of the insured shall, inherit the
proceeds paid to the estate of the insured.

Nearest relatives of the insured

In the order of the enumeration.

1. The legitimate children

2. The mother and father, if living
3. The grandfather and the grandmother, or ascendants nearest in

degree, if living

4. The illegitimate children

5. The surviving spouse
6. The collateral relatives
1. Brothers and sisters full blood
2. Brothers and sisters half-blood
3. Nephews and nieces
7. In default, the State

LIABILITY OF THE INSURER ON DEATH OF INSURED

Death at the hands of the law

According to Prof. Vance, this is one of the risks assumed by the insurer under a life insurance policy in the absence of a valid
policy exception

Death by self-destruction

It is quite clear, under Section 87, that the insurer is not liable in case the insured commits suicide intentionally. To hold
otherwise is to say that the insured may have to option when the event should happen. This is against the very essence of the
contract.

Death by suicide while insane

The suicide of the insured while insane does not discharge the insurer from his liability in the contract. Insanity is one of the
diseases that the insurer must have known that the insured was subject and the unwitting act of self-destruction is as much as
the consequence of that disease as if some vital organs were totally affected.

Death caused by the beneficiary

The beneficiary is not deprived of the proceeds in case where he killed the insured if it does not amount to felony such as self-
defense or accident or the beneficiary is insane.

Death caused by violation of law

The mere fact that the insured died while he was committing a felony or violating a law would not warrant denial of liability.
The insurer, to avoid liability, must prove that the commission of the crime had a causal connection with the accident resulting
in the death of the insured.

SECTION 13

Section 13. Every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such nature
that a contemplated peril might directly damnify the insured, is an insurable interest.

INSURABLE INTEREST IN PROPERTY

The interest may be in property itself (eg. ownership), or any relationship thereto (eg. Interest of a trustee or a commission agent),
or liability in respect thereof (eg. Interest of a carrier or depository of goods). Anyone has an insurable interest in property who
derives a benefit from its existence or would suffer loss from its destruction.

Occurrence of loss may be uncertain

It is not necessary that the interest is such that the event insured against would necessarily subject the insured to loss. It is
sufficient that it might do so, and that pecuniary injury would be the natural consequence.
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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]
Title or right to possession not essential

What is important is that the person has an insurable interest if he is so situated with respect to the property that he will suffer loss
as the proximate result of its damage or destruction.

Legal expectation of loss or benefit

Insurable interest in the property is not necessarily an interest in the property in the sense of title, but a concern in the preservation
of the property and such a relation to or connection with it as will necessarily entail a pecuniary loss in case of its injury or
destruction.

As a general rule, the expectation of benefit to be derived from the continued existence of property must have a basis of legal right,
although the person insured has no title, either legal or equitable, to the property insured.

Mere factual expectation of loss

Expectation not arising from legal right or duty does not constitute an insurable interest.

Important: Factual expectation, though usually insufficient in strict indemnity insurance, will suffice in life insurance

SECTION 14
Section 14. An insurable interest in property may consist in:
(a) An existing interest;
(b) An inchoate interest founded on an existing interest; or
(c) An expectancy, coupled with an existing interest in that out of which the expectancy arises.

An existing interest

This may be a legal title or equitable title. Undoubtedly, the absolute owner of the property has an insurable interest.

Examples of those persons with insurable interest arising from legal title:

1. Trustee, as in case of seller of property not yet delivered

2. Mortgagor of the property mortgaged
3. Lessor of the property leased
4. Lessee and sub-lessee may also insure property leased or

subleased

5. Assignee of property for the benefit of creditors

Examples of persons with insurable interest arising from equitable title:

1. Purchaser of property before delivery or before he has performed the conditions of sale
2. Mortgagee of property mortgaged
3. Mortgagor, after foreclosure but before expiration of the period

within which redemption is allowed

4. Beneficiary under a deed of trust

5. Creditors under a deed of assignment
6. Judgment debtor whose property has been seized under execution

until the right to redeem or the right to have the sale set aside

has been lost

7. Builders and constructors in the buildings pending payment of the

construction price

Important: More than one insurable interest may exist over the same property.

An inchoate interest

It must be founded on an existing interest.

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]
Example: A stockholder has an inchoate interest in the property of the corporation which he is a stockholder, which is founded on
existing interest arising from his ownership of shares in the corporation. His insurable interest is limited to the extent of the value of
his interest or share in the distribution of the corporation assets.

Likewise, a partner has an insurable interest in the firm property which will support a separate policy for his benefit.

As expectancy

The expectancy must be coupled with an existing interest in that out of which such expectancy arises.

Example: A farmer may insure future crops if they are to be grown on land owned by him at the time of the issuance of the policy,
or although the crops are to be raised by him on the land of another, provided the crops will belong to him when produced.

Similarly, an owner of a business can insure against a contingency which may cause loss of profits resulting from the cessation or
interruption of his business.

SECTION 15
Section 15. A carrier or depository of any kind has an insurable interest in a thing held by him as such, to the extent of his liability
but not to exceed the value thereof.

INSURABLE INTEREST OF CARRIER OR DEPOSITORY

The reason for this provision is that the loss of the thing may cause liability to the carrier or depository to the extent of its value.

SECTION 16
Section 16. A mere contingent or expectant interest in any thing, not founded on an actual right to the thing, nor upon any valid
contract for it, is not insurable.

A mere hope or expectation of benefit which may be frustrated by the happening of some event uncoupled with any present legal
right will not support a contract of insurance.

Property of father/son/spouse

A father cannot insure his son’s property or vice versa because the interest is merely an expectancy of inheriting. This is also similar
to the spouse’s situation.

Life of parents/children/spouses

By statutory provisions, parents and children, and spouses can insure each other’s life. Since under the law, there are under mutual
obligation to support each other, a life policy is held to be a means of fulfilling that obligation or a means of saving the party
entitled to support from being the subject of public charity.

Property of debtor

A general or unsecured creditor cannot insure specific property of his debtor who is alive, even though the destruction of such
would render worthless any judgment he might obtain.

But an unsecured creditor may insure the property of a deceased debtor since all personal liability ceases with the death of the
debtor. The proceedings to subject the estate to the payment of the debt of the deceased debtor are in rem.

Also, an unsecured creditor who obtains a judgment in his favor becomes a judgment creditor and has been held to have insurable
interest in the debtor’s property as he has right to levy on such property as may be necessary to satisfy judgment. However, to
recover insurance, he must show that the debtor has no other property out of which the judgment may be satisfied.

Property of testator still alive

One named as beneficiary in a will has no insurable interest in a property designated before the testator’s death. His expectation
has no legal basis since the will has no legal effect before the death of the testator. The will can be revoked unless the testator has
expressly waived.

SECTION 17

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]
Section 17. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss or injury
thereof.

MEASURE OF INSURABLE INTEREST IN PROPERTY

The purpose of property insurance is to indemnify a person against actual loss, and not to wager on the happening of the event.

SECTION 18
Section 18. No contract or policy of insurance on property shall be enforceable except for the benefit of some person having an
insurable interest in the property insured.

EFFECTS OF ABSENCE OF INSURABLE INTEREST IN PROPERTY INSURED

1. Principle of indemnity applicable

2. Doctrine of waiver or estoppel not applicable

Principle of indemnity applicable

An insurance taken out by a person on property which he has no insurable interest is void.

Where the insurance is invalidated on the ground that no insurable interest exists, the premium is ordinarily returned to the insured
unless he is in pari delicto with the insurer.

In life insurance taken by a person on his own life, it is not necessary for the beneficiary to have an insurable interest in the life
insured.

Doctrine of waiver or estoppel not applicable

This doctrine cannot be invoked since the public has an interest in the matter independent of the consent or concurrence of the
parties.

Measures of indemnity in insurance contracts

1. Contracts of marine or fire insurance

2. Liability insurance contracts
3. Life insurance contracts
4. Personal accident insurance contracts
5. Health insurance contracts
6. Health care agreement

Contracts of marine or fire insurance

The amount of insurance being limited by the value of the interest to be protected. The real purpose of the contract is, in case of
loss, to place the insured in the same situation on which he was before the loss subject to the terms and conditions of the policy.
The amount of indemnity may be determined after the loss or is previously fixed in the contract.

Pursuant to the general rule of indemnity, the amount of insurance fixed in the policy is not the exact measure of indemnity to
which the insured is entitled, but the maximum indemnity which he might obtain.

Liability insurance contracts

This is against liability and not loss. If the insured suffers no loss because his liability to the third person cannot be enforced, the
insurer has no obligation to pay the proceeds.

Life insurance contracts

This is not a contract of indemnity. The amount fixed payable at the death of the insured is not considered as the true value of the
thing insured because the life of the person is priceless. It is simply the measure of indemnity which the insurer has bound himself
to pay the insured.

The amount for which a person is insured is governed by the amount of premium that he contracted to pay. Life insurance is more
of an investment than indemnification protection against loss.

Personal accident insurance contracts

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]
This is not a contract of indemnity. However, if a person effects a personal accident insurance on the life of another person, the
amount recoverable is the loss sustained by the person who effected the policy.

In theory, this becomes a contract of indemnity but it is often impossible exactly to assess the injury suffered.

Health insurance contracts

Not a contract of indemnity. But those that cover medical expenses are contracts of indemnity. In these contracts, only medical
expenses incurred by the insured are paid.

Health care agreement

Agreement with a health maintenance organization (HMO) is in the nature of a non-life insurance which is a contract of indemnity.
Once a member incurs medical or hospital bills from sickness, injury and the like, the health care provider must pay for the same to
the extent agreed upon under the contract.

SECTION 19
Section 19. An interest in property insured must exist when the insurance takes effect, and when the loss occurs, but need not exist
in the meantime; and interest in the life or health of a person insured must exist when the insurance takes effect, but need not
exist thereafter or when the loss occurs.

TIME WHEN INSURABLE INTEREST MUST EXIST

1. When insurance takes effect and loss occurs 2. When insurance takes effect
3. When liability attaches
4. Need not exist during intervening period

When insurance takes effect and loss occurs

Insurable interest in property must exist on the date of execution of the contract of insurance and on the date of the occurrence of
the risk, otherwise, policy is void. If he has no insurable interest, he suffered no loss because it is an insurance of indemnity.

When insurance takes effect

This is applicable in life insurance, even if it has ceased to exist at the time of the insured’s death. Since the event which payment
to be made is certain to happen, it is logical to determine insurable interest at the time the contract was entered in to.

When liability attaches

In liability insurance, questions of insurable interest are not important. It necessarily exists when the liability of the insured to a
third party attaches.

Need not exist during intervening period

The purpose of the provision is to prevent the issue of wagering policies.

Existence of insurable interest when risk attaches

Existence of insurable interest at the inception of the contract, unless made so by a statute, is not at all necessary to its validity. It
is sufficient that insurable interest exists at the time the risk attaches.

INSURABLE INTEREST IN LIFE AND PROPERTY DISTINGUISHED

As to extent of insurable interest

In life insurance, it’s unlimited and in property, it is limited to the actual value of the interest.

As to time when insurable interest must exist

In life insurance, it is enough that the insurable interest exists at the time the policy takes effect and need not exist at the time of
the loss, while in property insurance, it must exist when the insurance takes effect and when the loss occurs, but need not exist at
the meantime.

As to expectation of benefit to be derived

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]
In life insurance, the expectation of benefit to be derived from the continued existence of life need not have any legal basis. In
property insurance, an expectation of benefit, to be derived from the continued existence of the property insured, however likely
and morally certain of realization it may be, will not afford a sufficient insurable interest unless that expectation has a basis of legal
right.

SECTION 20
Section 20. Except in the cases specified in the next four sections, and in the cases of life, accident, and health insurance, a change
of interest in any part of a thing insured unaccompanied by a corresponding change of interest in the insurance, suspends the
insurance to an equivalent extent, until the interest in the thing and the interest in the insurance are vested in the same person.

Effect, in general, of change of interest

Generally speaking, the mere transfer of a thing insured does not transfer the policy but suspends it until the same person becomes
the owner of both the policy and the thing insured. This is in accordance to Sec. 19 that an insured must have an insurable interest
in the property insured at the time of the loss.

Object of rule against alienation

This is to provide against changes which might supply a motive to destroy the property, or might lessen the interest of the insured
in protecting and guarding it.

Change of interest covered by law

The change of interest covered in Sections 20-24 means absolute transfer of property insured such as the conveyance of the
property by means of an absolute deed of sale. Consequently, the interest in the property insured does not pass by mere execution
of a pledge or a mortgage.

Exceptions to the general rule

The rule that change of interest suspends the insurance is subject to these exceptions:

1. In life, health and accident insurance

2. A change of interest in the thing insured after the occurrence of an

injury which results in a loss

3. A change of interest in one or more several things, separately

insured in one policy

4. A change of interest by will or succession on the death of the

insured

5. A transfer of interest by one of the several partners, joint owners

or owners in common, who are jointly insured, to the others

6. When a policy is so framed that it will inure to the benefit of whomsoever, during the continuance of a risk, may become
the

owner of the interest insured

7. When there is an express prohibition against alienation in the

policy, in case of alienation, the contract of insurance is not merely suspended but is avoided.

SECTION 21

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]
Section 21. A change of interest in a thing insured, after the occurrence of an injury which results in a loss, does not affect the right
of the insured to indemnity for the loss.

CHANGE OF INTEREST IN A THING INSURED AFTER LOSS

After the loss happened, the liability of the insurer becomes fixed. The insured has a right to assign his claim against the insurer as
freely as any other money claim. This right is absolute and cannot be delimited by an agreement. The insured has also the absolute
right to transfer the thing insured after the occurrence of the loss. Such change of interest does not after his right to indemnity for
the loss.

SECTION 22
Section 22. A change of interest in one or more of several distinct things, separately insured by one policy, does not avoid the
insurance as to the others.

CHANGE OF INTEREST WHERE SEVERAL THINGS SEPARATELY INSURED BY ONE POLICY

It is important to make a distinction between a divisible contract and an indivisible contract.

Effect dependent on divisibility of contract

If the things are “separately insured in one policy” the contract is divisible and the violation of a condition which avoids the policy
with respect to one or more of the things does not affect the others.

Conversely, if the things are insured under one policy for a gross sum and for an entire premium, the contract is indivisible so that a
change in interest in one or more of the things will also avoid the insurance as to the others.

Divisibility of a contract, a question of intention

This is to be determined by the language employed by the parties.

Example: where only one premium was paid for the entire shipment of goods, the insurance contract is indivisible and the fact that
the goods are loaded on two different vessels does not make the contract several and divisible as to the items insured.

SECTION 23
Section 23. A change of interest, by will or succession, on the death 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.

CHANGE OF INTEREST BY DEATH OF THE INSURED

It passes to the person’s heir, legatee or devisee who acquired interest in the thing insured. This passes from the moment of death
of the decedent.

SECTION 24
Section 24. A transfer of interest by one of several partners, joint 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 insurance shall cease upon an alienation of the thing
insured.

TRANSFER OF INTEREST BY ONE OF THE SEVERAL PARTNERS, ETC. JOINTLY INSURED

Effect where transfer is to the others

It will not avoid the insurance. The rule is the same even if there is a stipulation that the insurance shall cease upon an alienation of
the thing insured.

Reason for the rule

Each partner is interested in the whole property and the hazard is not increase because the purchasing partner has acquired a
greater interest in the property by a transfer of his co-partner’s share. The transfer does not affect the risk because no new party is
brought into contractual relationship with the insurer.

Exception to the rule

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]
A policy will be avoided by a sale of an interest in partnership property by the partner to one of his co-partners, without the consent
of the insurer and before the loss occurs, where the policy contains the condition “that in case of any sale, transfer, or change of
title of any property insured by this company, or of any undivided interest therein, such insurance will be void and cease.”

Effect when transfer is to a stranger

It is alienation or transfer to a stranger or third person that will avoid the policy. A sale of a partner of his interest to a stranger
ends the contract of insurance as to him but does not affect the insurance as to the others.

SECTION 25
Section 25. Every stipulation in a policy of insurance for the payment of loss whether the person insured has or has not any interest
in the 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 void.

STIPULATIONS PROHIBITED IN AN INSURANCE POLICY

Stipulation for the payment of loss whether the person insured has or has not any interest in the subject matter of the insurance
This is a mere wager policy or contract and is void. A wager policy has been defined as a pretended insurance where the insured
has no interest in the thing insured and can sustain no loss by the happening of the misfortunes insured against him. The law,
however, makes an exception in the cases mentioned in Section 181 regarding life insurance.

Stipulation that the policy shall be received as a proof of insurable interest

WON insurable interest exists does not depend upon the contract of insurance or the stipulations therein. The insurer can always
show lack of insurable interest after the issuance of a policy of insurance. Such defense of absence of insurable interest is available
only to the insurer.

WAGERING OR GAMING POLICIES VOID

A contract of insurance is void for illegality unless the insured has an insurable interest in the subject matter insured.

A mere bet upon a future event

Wager or gaming policies are disapproved and condemned not only under statutes declaring them void, but also on the ground of
public policy. They are regarded as detrimental to society. Such policies have a tendency to create a desire for the event.

Non-existence of loss from the occurrence of event

Wagers suffer no loss from the occurrence of the contingent event. They actually profit from it. The insurable interest requirement
intends to deter the insured from the temptation to bring about by unnatural means the results of the contingent event.

TITLE 4. CONCEALMENT

SECTION 26

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.
INSURANCE LAW PERSONAL REVIEWER ATTY. JVA
JACQUELYN R. VELARDE - ANINANG MANILA LAW COLLEGE [2023-2024]

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Nobody is going to fight your fight for you.

You have to do it for yourself, all alone, daily.