6. Principle of Insurable Interest Flashcards

1
Q

What is the definition of insurable interest?

A

Legal right to insure arising out of a financial relationship recognised at law between insured and subject matter

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2
Q

What are the 3 components of insurable interest?

A
  1. Subject matter (2 meanings)
    - of insurance: item or event insured eg car
    - of the contract: financial interest person has in SM of insurance. Castellain v Preston 1883
  2. Legal relationship eg ownership
  3. Financial value
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3
Q

When does insurable interest need to exist for Life insurance?

A

Must exist at inception but need not to at time of loss

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4
Q

When does insurable interest needs to exist for Marine insurance?

A

Must exist at time of loss but need not exist at inception, provided that there is a reasonable expectation of interest

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5
Q

When does insurable interest need to exist for General insurance?

A

Must exist at inception and time of loss

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6
Q

What is anticipated insurable interest?

A

Expectation of acquiring II at some time in the future is not enough to create II in general non-marine insurances - Lucena v Craufurd 1806

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7
Q

What are the 3 ways insurable interest arises?

A
  1. Common law
  2. Contact
  3. Statute
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8
Q

How does insurable interest arise through common law?

A

Owe duties to each other and have certain rights
Ownership - if own something stand to lose financially if lost or damaged

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9
Q

How does insurable interest arise through contract?

A

Imposition of responsibilities or potential liabilities

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10
Q

How does insurable interest arise through statue?

A

Some impose particular duty or grant some benefits
Some modify by restricting liability

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11
Q

How does insurable interest apply to property insurance?

A
  • Full owner
  • Part or joint owners (have to limit of their financial interest and trustee for any money paid that exceeds. Can insure full value
  • Agents (principal has, agent can insure on their behalf)
  • Bailees (holds property on temp basis for legal owner eg repairers or dry cleaners)
  • Tenants (not owner but would be liable for cost of repairs)
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12
Q

How does insurable interest apply to liability insurance?

A

Common law - have II to extent of potential legal liability may incur to pay damages

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