PART III

GUARANTEE INSURANCE

 

Section 887.- Guarantee insurance is a contract of insurance where the insurer agrees to make compensation, on behalf of the assured, for a loss caused to another person and for which the assured is responsible.

The injured person is entitled to receive the compensation actually due to him from the insurer directly, but such compensation cannot exceed the sum due by the insurer under the contract. In an action between the injured person and the insurer, the injured person shall summon the assured to appear in the action.

The insurer is not discharged from his liability to the injured person by delivering the compensation to the assured, unless he proves that compensation has been paid by the assured to the injured person.

 

Section 888.- If the compensation paid by the insurer under judgement does not cover the whole amount of the loss, the assured remains liable for the difference unless the injured person has failed to summon the assured to appear in the action as provided by the foregoing section.

 

CHAPTER III

INSURANCE ON LIFE

 

Section 889.- In a contract of insurance on life, the payment of the sum of money is dependent upon the life or death of a person.

 

Section 890.- The sum payable may be a lump sum or an annuity, as may be agreed between the parties.

 

Section 891.- Even in the case where the assured is not himself the beneficiary, he has the right to transfer the benefit of the contract to any other person unless he has delivered the policy to the beneficiary and the beneficiary has notified in writing the insurer his intention to take the benefit of the contract.

If the policy is made payable to order the provisions of Section 309 shall apply.

 

Section 892.- In case of avoidance of the contract under Section 865, the insurer has to return to the assured or to his heirs the redemption value of the policy.

 

Section 893.- If the age of the person upon whose life or death the payment of the sum depends has been incorrectly stated, in consequence of which a lower premium has been fixed, the sum to be paid by the insurer shall be reduced in the same proportion.

However the contract is voidable if it is proved by the insurer that the real age at the time when the contract was made was out of the age-limit according to his business practice.