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Questions and Answers
Define an insurance contract.
An agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.
What are the elements of an insurance contract?
Consent, Cause or Consideration, Object and Purpose, Insurable Interest.
Which of the following can be a subject matter of insurance? (Select all that apply)
What is the consideration for an insurance contract?
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An insurer is the person in whose favor the contract is operative and who is indemnified against losses.
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A contract of insurance is considered perfected when there is meeting of the minds between the parties.
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The _____ is the person designated by the insurance policy to receive the proceeds.
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A contract of insurance entered into by a minor is always void.
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What is insurable interest?
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Study Notes
Lesson Overview
- Importance of insurance: Secures financial wellbeing of individuals and businesses.
- Insurance provides protection against unforeseen events such as injury, illness, and death.
- Assists businesses in managing financial risks from events like accidents.
Insurance Contract
- Defined as an agreement where one party (insurer) indemnifies another (insured) for a contingency in exchange for a premium.
- Governed by Republic Act No. 10607, the Insurance Code of the Philippines.
Elements of Insurance Contracts
- Consent: Requires offer and acceptance, and parties must have legal capacity.
- Cause or Consideration: Premium paid by the insured acts as consideration.
- Object and Purpose: Transfer of risk associated with an unknown or contingent event.
- Additional Element: Insurable Interest - the insured must have a financial stake in the subject of insurance.
Subject Matter of Insurance
- General: Anything with financial value that is subject to loss or damage.
- Property Insurance: Covers physical property, e.g., fire or marine insurance.
- Life, Health, and Accident Insurance: Focuses on the individual’s life or health.
- Casualty Insurance: Covers risks that may lead to liability for damages to others.
Characteristics of Insurance Contracts
- Consensual: Based on mutual agreement.
- Voluntary: Generally not compulsory, although some insurances are legally required.
- Aleatory: Dependent on a contingent event.
- Contract of Indemnity: Primarily, insurers compensate for losses (except in life insurance).
Parties to the Insurance Contract
- Insurer: Assumes risks and agrees to indemnify the insured. Must be authorized to transact insurance.
- Insured: Person covered under the contract who receives indemnity; must have insurable interest and be legally capable of entering a contract.
Perfection of the Contract
- The insurance contract is perfected by agreement on terms (offer and acceptance) between the insurer and insured.
Understanding Insurance Business
- Activities that constitute doing insurance business:
- Proposing or making insurance contracts.
- Engaging in surety contracts as a primary activity.
- Conducting business recognized under the Insurance Code.
Important Legal Concepts
- Contracts without insurable interest are void.
- Any person or corporation can be insured as long as they have insurable interest.
- Consent is not needed from a spouse for insurance on one's life or their children's lives.
Key Takeaways
- The insurance contract is designed to provide financial protection against risks, structured through a consensus between the involved parties.
- Understanding the specifics of various insurances, legal definitions, and characteristics is crucial for students in this module.
- Analyzing and applying concepts such as insurable interest and the essence of risk transfer is essential in the field of insurance.
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Description
This quiz covers the general provisions of insurance as outlined in Module #1 of the BAM 200 course. It aims to assess students' understanding of key concepts and objectives. Prepare to demonstrate your knowledge on the fundamental aspects of insurance principles.
