Insurance Claims Payment and Interest Act

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Act No. 3802: Insurance Claims Payment and Interest Act

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Title Source: Supreme Court: Insurance Claims Payment and Interest Act

Law: Act No. 3802

Decision Date: Dec 4, 1930

The Amendment to Chapter 1 of Act No. 2427, also known as the Insurance Act, focuses on the prompt payment of claims and loss or damage covered by insurance policies in the Philippines, with specific timeframes and interest rates outlined for delayed payments.

Law Summary

Interest for Delay in Life Insurance Claim Payment

Failure or refusal to pay within the prescribed time entitles beneficiaries to 6% per annum interest on the delayed amount.
The insurer’s refusal is excused only if the claim is fraudulent.
Courts must determine the justification for contesting the claim if litigated.
If found unjustified, the beneficiary receives both the policy proceeds and interest.

Payment Timing for Non-Life Insurance Claims

Insurers must pay the amount of loss or damage within 30 days after receiving proof of loss and loss ascertainment.
Ascertainment can be through agreement or arbitration between insured and insurer.
If no ascertainment is made within 60 days after proof of loss, payment must be completed within 90 days of receipt of proof.

Interest for Delay in Non-Life Insurance Claim Payment

Failure or refusal to pay within prescribed time entitles assured to 8% per annum interest on the delayed amount.
Exception applies when the refusal is due to a fraudulent claim.
The court determines justification upon litigation.
If unjustified contestation is found, assured is entitled to both proceeds and interest.

Effective Date

The Act takes effect upon approval, which was December 4, 1930.

END