Act No. 2427 CHAPTER I.—Insurance in general.

Section 2–91 · 90 provisions

Compiled from an official source version. Later amendments or repeals may not be reflected; the official text prevails.・Read the official text ↗

Section 2

SEC. 2. Insurance is a contract whereby one undertakes for a consideration to indemnify another against loss, damage, or liability arising from an unknown or contingent WHAT MAY BE INSURED.

SEC. 3. Any contingent or unknown event, whether past of future, which may damnify a person having an insurable interest, or create a liability against him, may be insured agarausi subject to the provisions of this chapter.

Section 4

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.

Section 5

SEC. 5. All kinds of insurance are subject to the provisions of this chapter so far as the provisions can apply. PARTIES TO THE CONTRACT.

Section 6

SEC. 6. The person who undertakes to indemnify another by a contract of insurance is called the insurer, and the person indemnified is called the insured.

Section 7

SEC. 7. Every person, company, corporation, or association who holds a certificate of authority from the insurance commissioner, as elsewhere provided in this Act, may be an insurer.

Section 8

SEC. 8. Anyone except a public enemy may be insured.

Section 9

SEC. 9. 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.

Section 10

SEC. 10. 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 obligations on the assignee, making a new contract with him, the acts of the mortgagor can not affect the rights of said assignee. INSURABLE INTEREST.

Section 11

SEC. 11. Every person has an insurable interest in the life and health: (a) Of himself; (b) Of any person on whom he depends wholly or in part for education or support; (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 (d) Of any person upon whose life any estate or interest vested in him depends.

Section 12

SEC. 12. Every interest in property, whether real or personal, or any relation thereto, or liability in respect thereof, of such a nature that a contemplated peril might directly damnify the insured, is an insurable interest

Section 13

SEC. 13. 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.

Section 14

SEC. 14. 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.

Section 15

SEC. 15. A mere contingent or expectant interest in anything, not founded on an actual right to the thing, nor upon insurable. any valid contract for it, is not insurable.

Section 16

SEC. 16. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss or injury thereof.

Section 17

SEC. 17. The sole object of insurance is the indemnity of the insured, and if he has no insurable interest the contract is void.

Section 18

SEC. 18. An interest insured must exist when the insurance takes effect, and when the loss occurs, but need not exist in the meantime.

Section 19

SEC. 19. Except in the cases specified in the next four change of interest, 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.

Section 20

SEC. 20. 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.

Section 21

SEC. 21. A change of interest in one or more of several distinct distinct things, separately insured by one policy, does not avoid the insurance as to the others.

Section 22

SEC. 22. 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.

Section 23

SEC. 23. 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.

Section 24

SEC. 24. Every stipulation in a policy of insurance for stipulations the payment of loss whether the person insured has or has not any interest in the subject matter of the insurance except in the cases provided for in section one hundred and sixty-six or that the policy shall be received as proof of such interest, and every policy executed by way of gaming or wagering, is void. CONCEALMENT AND REPRESENTATIONS.

Section 25

SEC. 25. A neglect to communicate that which a party find knows and ought to communicate, is called a concealment.

Section 26

SEC. 26. A concealment, whether intentional or unintentional, entitles the injured party to rescind a contract of insurance.

Section 27

SEC. 27. Each party to a contract of insurance must communicate to the other, in good faith, all facts within his knowledge which are material to the contract, and which the other has not the means of ascertaining, and as to which he makes no warranty.

Section 28

SEC. 28. An intentional and fraudulent omission, on the paft of one insured to communicate information of matters proving or tending to prove the falsity of a warranty, entitles the insurer to rescind.

Section 29

SEC. 29. Neither party to a contract of insurance is bound to communicate information of the matters following, except in answer to the inquiries of the other: (a) Those which the other knows; (b) Those which, in the exercise of ordinary care, the other ought to know, and of which the former has no reason to suppose him ignorant; (c) Those of which the other waives communication; (d) Those which prove or tend to prove the existence of a risk excluded by a warranty, and which are not otherwise material; and. (e) Those which relate to a risk excepted from the policy, and which are not otherwise material.

Section 30

SEC. 30. Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries.

Section 31

SEC. 31. Each party to a contract of insurance is bound the general causes which are open to his inquiry, equally with that of the other, and which may affect either the political or material perils contemplated: and all general usages of trade.

Section 32

SEC. 32. The right to information of material facts may be wave either by the terms of insurance or by neglect to make inquiries as to such facts, where they are distinctly implied in other facts of which information is communicated.

Section 33

SEC. 33. Information of the nature or amount of the interest of one insured need not be communicated unless in answer to an inquiry, except as prescribed by section forty-nine.

Section 34

SEC. 34. Neither party to a contract of insurance is bound to communicate, even upon inquiry, information of his own judgment upon the matters in question.

Section 35

SEC. 35. A representation may be oral or written.

Section 36

SEC. 36. A representation may be made at the same time with issuing the policy, or before it.

Section 37

SEC. 37. The language of a representation is to be interpreted by the same rules as the language of contracts in

Section 38

SEC. 38. A representation as to the future is to be deemed a promise, unless it appears that it was merely a statement of belief or expectation.

Section 39

SEC. 39. A representation can not be allowed to qualify an express provision in a contract of insurance; but it may qualify an implied warranty.

Section 40

SEC 40. A representation may be altered or withdrawn before the insurance is effected, but not afterwards.

Section 41

SEC. 41. A representation must be presumed to refer to as date on which the contract goes into effect.

Section 42

SEC. 42. When a person insured has no personal knowledge of a fact, he may nevertheless repeat information which he has upon the subject, and which he believes to be true, with the explanation that he does so on the information of others, or he may submit the information, in its whole extent, to the insurer; and in neither case is he responsible for its truth, unless it proceeds from an agent of the insured, whose duty it is to give the intelligence.

Section 43

SEC. 43. A representation is to be deemed false when the facts fail to correspond with its assertions or stipulations.

Section 44

SEC. 44. If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time when the representation becomes false.

Section 45

SEC. 45. The materiality of a representation is determined by the same rule as the materiality of a concealment.

Section 46

SEC. 46. The provisions of sections twenty-five to forty-seven, inclusive, of this chapter apply as well to a modification of a contract of insurance as to its original formation.

Section 47

SEC. 47. Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, w en exercise such right must be exercised previous to the commencement of an action on the contract. THE POLICY.

Section 48

SEC. 48. The written instrument, in which a contract of defined, insurance is set forth, is called a policy of insurance.

Section 49

SEC. 49. 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 rate of premium; (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.

Section 50

SEC. 50. The insurance shall be applied exclusively to the proper interest of the person in whose name it is made unless otherwise specified in the policy.

Section 51

SEC. 51. When an insurance is made by an agent or trustee, the fact that his principal or beneficiary is the person really insured may be indicated by describing him as agent or trustee, or by other general words in the policy.

Section 52

SEC. 52. To render an insurance, effected by one partner common or part owner, applicable to the interest of his copartners, or of other part owners, it is necessary that the terms of the policy should be such as are applicable to the joint or common interest.

Section 53

SEC. 53. When the description of the insured in a policy of the is so general that it may comprehend any person or any class of persons, he only can claim the benefit of the policy who can show that it was intended to include him.

Section 54

SEC. 54. A policy may be so framed that it will inure to the benefit of whomsoever, during the continuance of the risk, may become the owner of the interest insured.

Section 55

SEC. 55. The mere transfer of a thing insured does no transfer the policy, but suspends it until the same person becomes the owner of both the policy and the thing insured.

Section 56

SEC. 56. A policy is either open, valued, or running.

Section 57

SEC. 57. An open policy is one in which the value of the thing insured is not agreed upon, but is left to be ascertained in case of loss.

Section 58

SEC. 58. A valued policy is one which expresses on its face an agreement that the thing insured shall be valued at a specified sum.

Section 59

SEC. 59. A running policy is one which contemplates successive insurances, and which provides that the object of the policy may be from time to time defined, especially as to the subjects of insurance, by additional statements or indorsements.

Section 60

SEC. 60. An acknowledgment in a policy of 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.

Section 61

SEC. 61. An agreement made before a loss, not to transfer the claim of a person insured against the insurer, after the loss has happened, is void. WARRANTIES.

Section 62

SEC. 62. A warranty is either expressed or implied,

Section 63

SEC. 63. A warranty may relate to the past, the present, the future, or to any or all of these.

Section 64

SEC. 64. No particular form of words is necessary to create a warranty.

Section 65

SEC. 65. Every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy, as making a part of it.

Section 66

SEC. 66. A statement in a policy, of a matter relating to the person or thing insured, or to the risk, as a fact, is an express warranty thereof.

Section 67

SEC. 67. A statement in a policy, which imports that it is intended to do or not to do a thing which materially affects the risk, is a warranty that such act or omission shall take place.

Section 68

SEC. 68. When, before the time arrives for the performance of a warranty relating to the future, a loss insured against happens, or performance becomes unlawful at the place of the contract, or impossible, the omission to fulfill the warranty does not avoid the policy.

Section 69

SEC. 69. The violation of a material warranty, or other material provision of a policy, on the part of either party thereto, entitles the other to rescind.

Section 70

SEC. 70. A policy may declare that a violation of specified provisions thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid the policy.

Section 71

SEC. 71. A breach of warranty, without fraud, merely exonerates an insurer from the time that it occurs, or where it is broken in its inception prevents the policy from attaching to the risk. PREMIUM.

Section 72

SEC. 72. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against.

Section 73

SEC. 73. 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.

Section 74

SEC. 74. If a peril insured against has existed, and the existence of 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.

Section 75

SEC. 75. A person insured is entitled to a return of the premium when the contract is voidable, on account of the fraud or misrepresentation of the insurer, or of his agent or on account of facts, of 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.

Section 76

SEC. 76. In case of an over-insurance by several insurers, insurance. 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. LOSS.

Section 77

SEC. 77. 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 of which the peril insured against was only a remote cause.

Section 78

SEC. 78. An insurer is liable where the thing insured is rescued from a peril insured against, that would otherwise have caused a loss, if in the course of such rescue the thing is exposed to a peril not insured against, which permanently deprives the insured of its possession, in whole or in part; or where a loss is caused by efforts to rescue the thing insured from a peril insured against.

Section 79

SEC. 79. Where a peril is specially excepted in a contract of insurance, a loss, which would not have occurred but for such peril, is thereby excepted; although the immediate cause of the loss was a peril which was not excepted:

Section 80

SEC. 80. An insurer is not liable for a loss caused by the willful act or through the connivance of the insured; but he is not exonerated by the negligence of the insured, or of his agents or others. NOTICE OF LOSS.

Section 81

SEC. 81. In case of loss upon an insurance against fire, an insurer is exonerated, if notice thereof be not given to him by some person insured, or entitled to the benefit of the insurance, without unnecessary delay.

Section 82

SEC. 82. When preliminary proof of loss is required by a policy, the insured is not bound to give such proof as would be necessary in a court of justice; but it is sufficient for him to give the best evidence which he has in his power at the time.

Section 83

SEC. 83. All defects in a notice of loss, or in preliminary proof thereof, which the insured might remedy, and which the insurer omits to specify to him, without unnecessary delay, as grounds of objection, are waived.

Section 84

SEC. 84. Delay in the presentation to an insurer of notice or proof of loss is waived, if caused by any act of his, or if he omits to take objection promptly and specifically upon that ground.

Section 85

SEC. 85. If a policy requires, by way of preliminary proof of loss, the certificate or testimony of a person other than the insured, it is sufficient for the insured to use reasonable diligence to procure it, and in case of the refusal of such person to give it, then furnish reasonable evidence to the insurer that such refusal was not induced by any just grounds of disbelief in the facts necessary to be certified. DOUBLE INSURANCE.

Section 86

SEC. 86. A double insurance exists where the same person is insured by several insurers separately in respect to the same subject and interest.

Section 87

SEC. 87. Where the insured is overinsured by double insurance— (a) The insured, unless the policy otherwise provides, may claim payment from the insurers in such order as he may select, up to the amount for which the insurers are severally liable under their respective contracts. (b) Where the policy under which the insured claims is a valued policy, the insured must give credit as against the valuation for any sum received by him under any other policy without regard to the actual value of the subject matter insured; (c) Where the policy under which the insured claims is an unvalued policy he must give credit, as against the full insurable value, for any sum received by him under any other policy; (d) Where the insured receives any sum in excess of the valuation in the case of valued policies and the insurable value in the case of unvalued policies, he must hold such sum in trust for the insurers, according to their right of contribution among themselves. (e) Each insurer is bound, as between himself and the other insurers, to contribute ratably to the loss in proportion to the amount for which he is liable under his contract. effects. REINSURANCE.

Provisions on this page are reproduced verbatim from official open data. See the attribution line.

Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).