As a rule, an insurance contract is consensual and voluntary. The exception is in the case of: (1%)
(A) Inland Marine Insurance
(B) Industrial Life Insurance
(C) Motor Vehicle Liability Insurance
(D) Life Insurance
Suggested answer only. Not an official answer and not legal advice.
The correct answer is (C) Motor Vehicle Liability Insurance. Under Chapter VI, Section 387 of the Insurance Code (RA 10607), compulsory motor vehicle liability insurance is mandated by law, making it an exception to the
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Quick check
Which type of insurance contract serves as a statutory exception to the general rule that insurance contracts are consensual and voluntary?
Compulsory Motor Vehicle Liability Insurance is mandated by statute and serves as an exception to voluntary insurance contracts.
Under Section 387 of Republic Act Number 10607, what condition must be met before operating a motor vehicle on Philippine public highways?
Section 387 requires motor vehicle owners to secure compulsory liability insurance or a guaranty bond before operating on public highways.
What primary public policy objective justifies making motor vehicle liability insurance compulsory under the Insurance Code?
Compulsory motor vehicle liability insurance is enacted to protect passengers and third-party accident victims.
Can a motor vehicle owner lawfully register a land transportation vehicle with the Land Transportation Office without compulsory liability insurance?
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Which primary statute governs compulsory motor vehicle liability insurance, insurable risks, and insurer obligations in the Philippines?
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Learn more about these topics
1. Compulsory Motor Insurance
Under Chapter VI, Section 387 of the Insurance Code of the Philippines (Republic Act Number 10607), compulsory motor vehicle liability insurance is mandated by law for all motor vehicle owners and land transportation operators. Unlike ordinary insurance contracts which rely entirely on voluntary agreement and mutual consent between the contracting parties, the law makes it unlawful to register or operate any motor vehicle on public highways without securing a subsisting insurance policy or indemnity guaranty bond to cover potential liability for bodily injury or death.
2. Consensual Contract Exception
As a general rule under Philippine civil law and insurance jurisprudence, an insurance contract is voluntary, bilateral, and consensual, taking effect upon mutual assent. However, compulsory motor vehicle liability insurance constitutes a statutory exception to this voluntary nature. The state exercises its police power to compel vehicle owners to procure liability coverage as a prerequisite for vehicle registration, ensuring that financial indemnity is immediately available to accident victims regardless of the owner's personal solvency or willingness to insure.
3. Third Party Protection
Compulsory motor vehicle liability insurance is designed primarily to protect third-party victims and passengers who suffer bodily injury or death arising from motor vehicle accidents. Under Section 388 of Republic Act Number 10607, the insurer's liability attaches directly upon the occurrence of the accident causing loss. This statutory scheme ensures prompt financial relief to injured third parties without requiring them to first litigate or prove the insured's underlying tortious fault before receiving essential medical reimbursement or indemnity.