Insurance Policy

Section 49.  The written instrument in which a contract of insurance is set forth, is called a policy of insurance.

Section 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.

What is a policy of insurance?

Sec. 49 defines a policy of insurance as a written instrument in which the contract of insurance is set forth.

Who signs the policy of insurance:

Generally, only the insurer or his duly authorized agent signs the policy.  It need not be singed by the insured EXCEPT where the express warranties are contained in a separate instrument forming part of the policy, in which case, Sec. 70 requires that the instrument be so signed.

Why are the terms of the policy important?

They are important because they measure the liability of the insurer on one hand, and the other hand, strict compliance with the terms are required for the recovery on the part of the insured.

Is the policy and the Contract one and the same thing?

NOPE.  A contract is a meeting of the minds of the insured and the insurer.  (Remember CLV?)  The policy ONLY the formal written instrument evidencing the contract.

What is usually the best evidence that a contract has been entered into between the insurer and the insured?

Delivery of the policy by the insurer to the insured.

What are the effects of the delivery of the policy?

If the delivery is conditional, non-fulfillment of the condition bars the contract from taking effect.

If the deliver is unconditional, the insurance becomes effective at the time of delivery.

What is a rider?

It is a printed or typed stipulation contained on a slip of paper attached to the policy and forming an integral part of the policy.  Riders are usually attached to the policy because they constitute additional stipulations between the parties.

What happens if there is an inconsistency between the policy and the rider?

RIDER prevails, as being a more deliberate expression of the agreement of the contracting parties.

What are the requirements in order that a rider be binding upon the insured?

1)       Descriptive title or name of the rider which is pasted or attached to a policy MUST be mentioned and written on the blank spaces provided for in the policy; and

2)       Unless applied for by the insured or owner, said insured or owner MUST countersign the rider.

Do the preceding requirements apply only to riders?

NO. they apply also to warranties, clauses and endorsements.

What are warranties?

Warranties are inserted or attached to a policy to eliminate specific potential increases of hazard during the policy term owing to actions of the insured, or conditions of property.

What are clauses?

Clauses are agreements between the insurer and the insured on certain matters relating to the laibiity of the insurer in case of loss.

What are examples of clauses:

1)       ¾ Clause – where the insurer is liable for only ¾ of the loss or damage to the insured

2)       Loss Payable clause – where the loss if any is payable to the party or parties named, as their interests may appear.

3)       Change of Ownership clause  where the insurance will insure to the benefit of whomsoever, during the continuance of the risk, may become the owner of the interest insured.

What is an endorsement?

An endorsement is any provision added to an insurance contract altering its scope or application.  Examples would be those additions to the contract changing the amount, the rate or the term of the same.

What does Sec. 226 say?

Section 226.                No policy, certificate or contract of insurance shall be issued or delivered within the Philippines unless in the form previously approved by the Commissioner, and no application form shall be used with, and no rider, clause, warranty or endorsement shall be attached to, printed or stamped upon such policy, certificate or contract unless the form of such application, rider, clause, warranty or endorsement has been approved by the Commissioner.