Ch :4 Insurable Interest Flashcards
What is insurable interest
It is a legal right to insure arising out of a financial relationship recognised at law between the insured and the subject-matter of insurance.
Features of insurable interest
-subject matter
-legal relationship
-financial value
Subject matter used in 2 ways
1.Subject matter of the insurance
2.Subject matter of the contract
Example of legal relationship
Ownership
Codifying Act (bringing together and updating all previous legislation on the subject )
Marine insurance Act 1906 (MIA 1906)
Which class of insurance is considered void in the absence of insurable interest at the time of any loss.
Marine Insurance contract
Which act made it a criminal offence to effect if there is no insurable interest or there is no reasonable expectation of such an interest
The Marine Insurance (Gambling Policies ) Act 1909
General insurance contracts
Are contracts of indemnity
Advice insurable interest existence in life ,marine or general insurance contracts.
Life insurance contracts: insurable interest must exist at in inception but need not exist at the time of a loss.
Marine insurance contracts : insurable interest must exist at the time of loss but need not exist at inception ,provided that there is reasonable expectation of interest .
General insurance contracts : A general rule that insurable interest must exist both at inception and at the time of a loss.
When must insurable interest 1st exist in order for a pvt motor insurance policy to be enforceable at law.
At inception of the policy
Who are bailee
Someone holds property on a temporary basis on behalf of a legal owner is called as bailee.
Insurable interest can be created by
Ownership ,contract and legislation
What does a tenant have insurable interest in the property they live in
They may be liable for the cost of repairs
Tony Is effecting an insurance policy on behalf of another party .Tony is not the owner of the property but he is able to arrange insurance because he is an
Agent of the other party
A dry cleaner has an insurable interest in the garments they clean and is therefore referred as
Bailee
If an insurance Co wants to reinsure part of a risk they hold their financial interests in the original insurance is known as
Subject matter of the contract
Insurable interest can arise at
-common law
-under contract
-under statute
Insurable interest of a shareholder in a limited co is limited to
the value of the shares that they own
At common law a person’s insurable interest in their potential legal liabilities includes
the claimants damages and legal costs
Which principle concerning insurable interest under a general non marine contract of insurance is illustrated by the case of lucena v crauford (1806)
The expectation of acquiring insurable interest at some time in the future (however certain) may not be enough to create insurable interest
A requirement of the life assurance act 1774 for a life insurance policy to be valid
The name of the person effecting the policy must be shown
A tenant is most likely to have an insurable interest in the property they rent
Under contract
Example of a statute restricting liability ans therefore insurable interest
The hotel proprietors act 1956
Which statutes makes tenants responsible for the upkeep of the bldgs they occupy , giving them an insurable interest
The settled land act 1925
Case of castellain v Preston (1883) laid down an important principle with regards to which of the features of insurable interest
The subject matter of the contract
Rohan hits the back of Dia’s car which is stopped at traffic lights damaging the rear of dias car.Dia also suffer whiplash injuries.the requirement for roman to pay compensation for the injuries and damages caused is an example of insurableinterestarising out of
Common law
The definition of insurable interest includes
A loss, damage and potential liability including costs
Dia is unable to insure his brothers car because the principle of
Insurable interest
Primary purpose of insurable interest is to
Avoid gambling and speculation
If a tenant has a lease on the property he rents , making him responsible for insuring it even though he does not own it
The lease is an contractual agreement which would give insurable interest allowing him to insure the property
Which insurance principle requires the proposer to have an financial interest in the subject of an insurance policy
Insurable interest
When talking about the concept of insurable interest the term subject matter of insurance refers to the
Item or event insured
Simon is purchasing a house and the terms of agreement require him to insure the property from exchange of contracts.wjat is the position in relation to principle of insurable interest
The contract creates insurable interest
Which statutes make the tenants responsible for the upkeep of the building they occupy and gives the tenant an insurable interest
Settle land act 1925 and the repair of benefice building Measure Act 1972
Which statutes restrict liability and therefore restrict insurable interest
Hotel proprietors act 1956 , Carriers Act 1830 , Trustee Act 1925 , Carriage of goods by sea Act 1971
