Sec. 1. This Decree shall be known as "The Insurance Code".

Sec. 2. Whenever used in this Code, the following terms shall have the respective meanings
hereinafter set forth or indicated, unless the context otherwise requires:
(1) 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.
A contract of suretyship shall be deemed to be an insurance contract, within the meaning of
this Code, only if made by a surety who or which, as such, is doing an insurance business as
hereinafter provided.
(2) The term "doing an insurance business" or "transacting an insurance business", within the
meaning of this Code, shall include:
(a) making or proposing to make, as insurer, any insurance contract;
(b) making or proposing to make, as surety, any contract of suretyship as a vocation and not as
merely incidental to any other legitimate business or activity of the surety;
(c) doing any kind of business, including a reinsurance business, specifically recognized as
constituting the doing of an insurance business within the meaning of this Code;
(d) doing or proposing to do any business in substance equivalent to any of the foregoing in a
manner designed to evade the provisions of this Code.
In the application of the provisions of this Code the fact that no profit is derived from the
making of insurance contracts, agreements or transactions or that no separate or direct
consideration is received therefor, shall not be deemed conclusive to show that the making
thereof does not constitute the doing or transacting of an insurance business.
(3) As used in this code, the term "Commissioner" means the "Insurance Commissioner".

Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the
insurance company for the injury or loss arising out of the wrong or breach of contract
complained of, the insurance company shall be subrogated to the rights of the insured against
the wrongdoer or the person who has violated the contract. If the amount paid by the
insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled
to recover the deficiency from the person causing the loss or injury.

Title 1
WHAT MAY BE INSURED
Sec. 3. Any contingent or unknown event, whether past or future, which may damnify a person
having an insurable interest, or create a liability against him, may be insured against, subject to
the provisions of this chapter.
The consent of the husband is not necessary for the validity of an insurance policy taken out by
a married woman on her life or that of her children.
Any minor of the age of eighteen years or more, may, notwithstanding such minority, contract
for life, health and accident insurance, with any insurance company duly authorized to do
business in the Philippines, provided the insurance is taken on his own life and the beneficiary
appointed is the minor's estate or the minor's father, mother, husband, wife, child, brother or
sister.
The married woman or the minor herein allowed to take out an insurance policy may exercise
all the rights and privileges of an owner under a policy.
All rights, title and interest in the policy of insurance taken out by an original owner on the life
or health of a minor shall automatically vest in the minor upon the death of the original owner,
unless otherwise provided for in the policy.
Sec. 4. The preceding section does not authorize an insurance for or against the drawing of any
lottery, or for or against any chance or ticket in a lottery drawing a prize.
Sec. 5. All kinds of insurance are subject to the provisions of this chapter so far as the provisions
can apply.
Title 2
PARTIES TO THE CONTRACT
Sec. 6. Every person, partnership, association, or corporation duly authorized to transact
insurance business as elsewhere provided in this code, may be an insurer.
Sec. 7. Anyone except a public enemy may be insured.
Sec. 8. Unless the policy otherwise provides, where a mortgagor of property effects insurance
in his own name providing that the loss shall be payable to the mortgagee, or assigns a policy of
insurance to a mortgagee, the insurance is deemed to be upon the interest of the mortgagor,
who does not cease to be a party to the original contract, and any act of his, prior to the loss,
which would otherwise avoid the insurance, will have the same effect, although the property is
in the hands of the mortgagee, but any act which, under the contract of insurance, is to be
performed by the mortgagor, may be performed by the mortgagee therein named, with the
same effect as if it had been performed by the mortgagor.
Sec. 9. If an insurer assents to the transfer of an insurance from a mortgagor to a mortgagee,
and, at the time of his assent, imposes further obligation on the assignee, making a new
contract with him, the act of the mortgagor cannot affect the rights of said assignee.

Sec. 53. The insurance proceeds shall be applied exclusively to the proper interest of the person
in whose name or for whose benefit it is made unless otherwise specified in the policy.
Sec. 54. When an insurance contract is executed with an agent or trustee as the insured, the
fact that his principal or beneficiary is the real party in interest may be indicated by describing
the insured as agent or trustee, or by other general words in the policy.
Sec. 55. To render an insurance effected by one partner or part-owner, applicable to the
interest of his co-partners or other part-owners, it is necessary that the terms of the policy
should be such as are applicable to the joint or common interest.
Sec. 56. When the description of the insured in a policy is so general that it may comprehend
any person or any class of persons, only he who can show that it was intended to include him
can claim the benefit of the policy.
Title 3
INSURABLE INTEREST
Sec. 10. Every person has an insurable interest in the life and health:
(a) Of himself, of his spouse and of his children;
(b) Of any person on whom he depends wholly or in part for education or support, or in whom
he has a pecuniary interest;
(c) 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; and Commented [lz1]: An insurable interest is the basis of the
(d) Of any person upon whose life any estate or interest vested in him depends. amount.

Sec. 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.
Sec. 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 which event, the nearest relative of the insured shall receive the proceeds of said
insurance if not otherwise disqualified.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 16. A mere contingent or expectant interest in anything, not founded on an actual right to
the thing, nor upon any valid contract for it, is not insurable.
Sec. 17. The measure of an insurable interest in property is the extent to which the insured
might be damnified by loss or injury thereof.
Sec. 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.
Sec. 19. An interest in property insured must exist when the insurance takes effect, and when
the loss occurs, but 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.
Sec. 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 in 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.
Sec. 21. A change in 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.
Sec. 22. A change of interest in one or more several distinct things, separately insured by one
policy, does not avoid the insurance as to the others.
Sec. 23. A change on 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.
Sec. 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.
Sec. 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.

Sec. 58. 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.

Title 8
PREMIUM
Sec. 77. An insurer is entitled to payment of the premium as soon as the thing insured is
exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy
or contract of insurance issued by an insurance company is valid and binding unless and until
the premium thereof has been paid, except in the case of a life or an industrial life policy
whenever the grace period provision applies.
Sec. 78. An acknowledgment in a policy or contract of insurance or the receipt of premium is
conclusive evidence of its payment, so far as to make the policy binding, notwithstanding any
stipulation therein that it shall not be binding until the premium is actually paid.
Sec. 79. A person insured is entitled to a return of premium, as follows:
(a) To the whole premium if no part of his interest in the thing insured be exposed to any of the
perils insured against;
(b) Where the insurance is made for a definite period of time and the insured surrenders his
policy, to such portion of the premium as corresponds with the unexpired time, at a pro rata
rate, unless a short period rate has been agreed upon and appears on the face of the policy,
after deducting from the whole premium any claim for loss or damage under the policy which
has previously accrued; Provided, That no holder of a life insurance policy may avail himself of
the privileges of this paragraph without sufficient cause as otherwise provided by law.

Sec. 80. If a peril insured against has existed, and the insurer has been liable for any period,
however short, the insured is not entitled to return of premiums, so far as that particular risk is
concerned.
Sec. 81. A person insured is entitled to return of the premium when the contract is voidable, on
account of fraud or misrepresentation of the insurer, or of his agent, or on account of facts, the
existence of which the insured was ignorant without his fault; or when by any default of the
insured other than actual fraud, the insurer never incurred any liability under the policy.
Sec. 82. In case of an over-insurance by several insurers, the insured is entitled to a ratable
return of the premium, proportioned to the amount by which the aggregate sum insured in all
the policies exceeds the insurable value of the thing at risk.
Title 9
LOSS
Sec. 83. An agreement not to transfer the claim of the insured against the insurer after the loss
has happened, is void if made before the loss except as otherwise provided in the case of life
insurance.
Sec. 84. Unless otherwise provided by the policy, an insurer is liable for a loss of which a peril
insured against was the proximate cause, although a peril not contemplated by the contract
may have been a remote cause of the loss; but he is not liable for a loss which the peril insured
against was only a remote cause.

Title 6
THE POLICY
Sec. 49. The written instrument in which a contract of insurance is set forth, is called a policy of
insurance.
Sec. 50. The policy shall be in printed form which may contain blank spaces; and any word,
phrase, clause, mark, sign, symbol, signature, number, or word necessary to complete the
contract of insurance shall be written on the blank spaces provided therein.
Any rider, clause, warranty or endorsement purporting to be part of the contract of insurance
and which is pasted or attached to said policy is not binding on the insured, unless the
descriptive title or name of the rider, clause, warranty or endorsement is also mentioned and
written on the blank spaces provided in the policy.
Unless applied for by the insured or owner, any rider, clause, warranty or endorsement issued
after the original policy shall be countersigned by the insured or owner, which countersignature
shall be taken as his agreement to the contents of such rider, clause, warranty or endorsement.
Group insurance and group annuity policies, however, may be typewritten and need not be in
printed form.
Sec. 51. A policy of insurance must specify:
(a) The parties between whom the contract is made;
(b) The amount to be insured except in the cases of open or running policies;
(c) The premium, or if the insurance is of a character where the exact premium is only
determinable upon the termination of the contract, a statement of the basis and rates upon
which the final premium is to be determined;
(d) The property or life insured;
(e) The interest of the insured in property insured, if he is not the absolute owner thereof;
(f) The risks insured against; and
(g) The period during which the insurance is to continue.
Sec. 52. Cover notes may be issued to bind insurance temporarily pending the issuance of the
policy. Within sixty days after the issue of the cover note, a policy shall be issued in lieu
thereof, including within its terms the identical insurance bound under the cover note and the
premium therefor. chanrobles virtual law library
Cover notes may be extended or renewed beyond such sixty days with the written approval of
the Commissioner if he determines that such extension is not contrary to and is not for the
purpose of violating any provisions of this Code. The Commissioner may promulgate rules and
regulations governing such extensions for the purpose of preventing such violations and may by
such rules and regulations dispense with the requirement of written approval by him in the
case of extension in compliance with such rules and regulations.

Sec. 59. A policy is either open, valued or running.