A person is said to have an insurable interest in the subject matter insured where he has a relation or connection with, or concern in it that he will derive pecuniary benefit or advantage from its preservation. Which among the following subject matters is not considered insurable? (1%)
(A) A partner in a firm on its future profits
(B) A general creditor on debtor’s property
(C) A judgment creditor on debtor’s property
(D) A mortgage creditor on debtor’s mortgaged property
Suggested answer only. Not an official answer and not legal advice.
The correct answer is (B) A general creditor on debtor's property. Under Sections 13, 14, and 16 of the Insurance Code (RA 10607), an insurable interest in property requires an existing interest, an inchoate interest founded on an existing interest,
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Quick check
Why is a general creditor not considered to have an insurable interest in a debtor's specific property under RA 10607?
A general creditor has no legal or equitable lien on the debtor's property, making their interest a mere uninsurable expectancy.
Under Section 16 of the Insurance Code, what type of interest in property is expressly declared uninsurable?
Section 16 provides that a mere contingent or expectant interest not founded on an actual right or contract is not insurable.
Does a mortgage creditor possess an insurable interest in the debtor's mortgaged property under Philippine insurance law?
A mortgage creditor holds an insurable interest in the mortgaged property to the extent of the mortgage debt.
When does a judgment creditor acquire a valid insurable interest in a debtor's property under the Insurance Code?
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Which primary statute defines insurable interest in property, expectant interests, and insurable risks in the Philippines?
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Learn more about these topics
1. Property Insurable Interest
Under Sections 13, 14, and 16 of the Insurance Code of the Philippines (Republic Act Number 10607), an insurable interest in property consists of an existing interest, an inchoate interest founded on an existing interest, or an expectancy coupled with an existing interest. A mere contingent or expectant interest in anything, not founded on an actual right to the property or a valid contract, is not insurable under the law.
2. General Creditor Status
Under Philippine insurance jurisprudence, a general creditor possesses no legal or equitable title, lien, or real right over the specific personal or real property of their debtor prior to attachment or levy. Consequently, a general creditor's interest in the debtor's assets is a mere expectation of payment unsupported by any direct right against specific property, rendering the debtor's property uninsurable by the general creditor.
3. Secured Creditor Interests
Under Sections 13 and 14 of Republic Act Number 10607, judgment creditors and mortgage creditors possess valid insurable interests in the debtor's property. A mortgage creditor holds a direct legal lien over the mortgaged property, while a judgment creditor acquires a legal lien upon levying execution on the debtor's property. Similarly, a partner holds an insurable interest in firm assets and future profits based on their partnership contract.