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    Sec. 99 A Reinsurance Is Presumed To Be A Contract of Indemnity Against Liability, and Not Merely Against Damage

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    Florena Cayunda
    Reinsurance is a contract of indemnity against liability rather than solely against damages. It is a separate contract between the original insurer and reinsurer that does not directly involve the original insured. The reinsurer's liability is limited to the amount the original insurer is liable to the original insured under the original insurance policy terms, up to the maximum amount of reinsurance. The original insured has no legal interest or privity in the reinsurance contract unless the contract was specifically made to directly benefit the original insured.

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    Sec. 99 A Reinsurance Is Presumed To Be A Contract of Indemnity Against Liability, and Not Merely Against Damage

    Uploaded by

    Florena Cayunda
    88 views2 pages
    Reinsurance is a contract of indemnity against liability rather than solely against damages. It is a separate contract between the original insurer and reinsurer that does not directly involve the original insured. The reinsurer's liability is limited to the amount the original insurer is liable to the original insured under the original insurance policy terms, up to the maximum amount of reinsurance. The original insured has no legal interest or privity in the reinsurance contract unless the contract was specifically made to directly benefit the original insured.

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    Insurance-REINSURANCE

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    Reinsurance is a contract of indemnity against liability rather than solely against damages. It is a separate contract between the original insurer and reinsurer that does not directly involve the original insured. The reinsurer's liability is limited to the amount the original insurer is liable to the original insured under the original insurance policy terms, up to the maximum amount of reinsurance. The original insured has no legal interest or privity in the reinsurance contract unless the contract was specifically made to directly benefit the original insured.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    88 views2 pages

    Sec. 99 A Reinsurance Is Presumed To Be A Contract of Indemnity Against Liability, and Not Merely Against Damage

    Uploaded by

    Florena Cayunda
    Reinsurance is a contract of indemnity against liability rather than solely against damages. It is a separate contract between the original insurer and reinsurer that does not directly involve the original insured. The reinsurer's liability is limited to the amount the original insurer is liable to the original insured under the original insurance policy terms, up to the maximum amount of reinsurance. The original insured has no legal interest or privity in the reinsurance contract unless the contract was specifically made to directly benefit the original insured.

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    of 2

    Sec.

    99 A reinsurance is presumed to be a contract of indemnity against


    liability, and not merely against damage.

    Nature of the contract of Reinsurance


    - the subject of the contract of reinsurance is primary the insurers risk and not
    the property insured under the original policy

    one of, a contract of indemnity against liability


    - the reinsurer agrees to indemnify the insurer, not against actual payment made
    but against liabilities incurred

    separate from original insurance policy


    - the contract of insurance is independent of and separate from the contract of
    reinsurance

    based on original policy


    - the policy of reinsurance, however, is necessarily based upon the original policy,
    and the rights of the parties while, of course, fixed by the terms and conditions of the
    policy of reinsurance are yet greatly affected by the terms and conditions of the original
    policy upon which the reinsurance contract is based

    insurable interest requirement applicable

    rule on subrogation applicable

    Example:
    A insured his building against fire with One Co, One Co., in turn, reinsured its risk with
    Two Co. The building insured by A was burned but One Co.(insurer) could not pay because it
    was insolvent.
    One Co., may collect from Two Co. (reinsurer) because reinsurance is a contract of
    indemnity against liability of the insurer.

    Extent of Liability of the Reinsurer


    The liability of the reinsurer is measured by the liability of the reinsured to the original
    policyholder provided this does not exceed the amount of reinsurance.

    Example:
    A insured his building against fire with One Co. for P1,000,000.00. One Co. obtained a
    reinsurance policy from Two Co. for P1,200,000.00. The house was totally burned.

    Since, the liability of One Co. to A was only P1,000,000 in as much as A cannot recover
    more than the damage he suffered, it followed that Two Co. was liable to One Co. for only P1M,
    because the reinsurers liability is measured by the reinsureds liability to the original insured.
    Sec. 100 The original insured has no interest in a contract of reinsurance.

    Does the original insured has interest in a contract of reinsurance?

    None. The original insured has no interest in a contract of reinsurance. Reinsurance is a


    contract solely between the reinsured and the reinsurer and creates no privity of contract
    between the reinsurer and the original insured. However, if the contract of reinsurance is made
    directly for the benefit of the reinsureds policyholders or if the reinsurer assumes and agrees to
    perform the reinsureds contracts, Then, reinsurer becomes directly liable to the policyholders.
    It is necessary for the original insured to accept and communicate acceptance of such benefit to
    the reinsurer before revocation.

    Art. 1311 xxx If a contract should contain some stipulation in favor of a third person, he may demand its
    fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere
    incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and
    deliberately conferred a favor upon a third person. (1257a)

    Art. 1291. Obligations may be modified by:


    (1) Changing their object or principal conditions;
    (2) Substituting the person of the debtor;
    (3) Subrogating a third person in the rights of the creditor. (1203)

    Art. 1293. Novation which consists in substituting a new debtor in the place of the original one, may be
    made even without the knowledge or against the will of the latter, but not without the consent of the
    creditor. Payment by the new debtor gives him the rights mentioned in Articles 1236 and 1237. (1205a)

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