CH 4 Insurable Interest

Question 1

What is Insurable Interest

Answer 1

This is the right to ensure arising out of a financial relationship recognized at law, between the insured and the subject-matter of insurance

Question 2

What are the main features of insurable interest

Answer 2

1. financial value

2. legal relationship

Question 3

What are the two ways subject matter is used

Answer 3

1. Subject matter of Insurance

2. Subject matter of the contract

Question 4

Subject Matter of Insurance

Answer 4

The item or event insured. For Example car, building, or any event that can cause a legal liability

Question 5

Subject matter of Contract

Answer 5

The financial interest a person has in the subject matter of Insurance

Question 6

The Marine Insurance Act 1906(MIA 1906) stated

Answer 6

This was a codifying Act,it stated that any marine insurance contract was void in the absence of insurable interest at the time of any loss

Question 7

The Marine Insurance (Gambling Policies) Act 1909 made what illegal

Answer 7

It made it a criminal offence to effect marine policy where either there is no insurable interest or no reasonable expectation for such an interest

Question 8

For Marine Insurance Insurable interest is required

Answer 8

It must exist at the time of the loss, it does not need to exist at the inception as long as there is a reasonable expectation of interest

Question 9

Before Life Assurance 1774 what practice did people effect

Answer 9

People had developed a practice of effecting life insurance policies on another person’s life simply as a form of wager

Question 10

What did the Life Assurance Act 1774 state

Answer 10

The act stated that there must be insurable interest at the inception of a life insurance policy, and the name of the person effecting the policy has to be shown and they can only recover the value of their interest.

Question 11

Is insurable interest required at the time of claim of a life policy

Answer 11

No, there is no need of insurable interest then

Question 12

The Life Assurance 1774 Act excluded its applications on which insurance

Answer 12

It specifically excluded its application on insurances of goods,ships or merchandise

Question 13

The Gambling Act 1845 stated that

Answer 13

The act made all contracts of gambling or waging null and void

Question 14

Taking general insurance where there is no insurable interest treat the contracts as

Answer 14

This treats the contract as gambling and therefore will have no effect. Thus a general rule is if general insurance is taken without insurable interest it is void ab initio

Question 15

For general insurance policies like property,motor,liability e.t.c when are they subject to insurable interest

Answer 15

These are contracts of indemnity so they are subject to the rule of insurable interest at the time of the claim and also actual or expected insurable interest is required at the inception of the policy

Question 16

Which law supports that general insurance policies do not require insurable interest at the inception of the policy

Answer 16

Williams vs Baltic Assurance Association(1924)

Question 17

Insurable Interest of the subject matter of an insurance policy arises from

Answer 17

1. Common Law
2. Contract
3. Statute

Question 18

Common law

Answer 18

we all owe duties to each other and have certain rights, that will give rise to insurable interest, like ownership of something, we stand to lose financially if it is lost or damaged or when you cause injury to someone through negligence, the financial aspect to this gives insurable interest

Question 19

Contract as one of the features of insurable interest

Answer 19

When we get into a contract it gives us a greater responsibilities than those imposed by common law. These responsibilities/potential liabilities create insurable interest

Question 20

Statute as one of the features of insurable interest

Answer 20

There are few statues/act of parliament, which impose a particular;llar duty/grant to certain groups of people, thus leading to creation or modification of insurable interest

Question 21

Which statutes restrict liability thus limiting insurable interest

Answer 21

1. Carriage of Goods by Sea Act 1971
2. Hotel Proprietors’ Act 1856
3. Carriers Act 1830
4. Trustee Act 1925

Question 22

Insurable Interest generally arises from

Answer 22

It generally arises from ownership

Question 23

When does insurable interest of property arises when the insured is not the full owner of the subject matter

Answer 23

1. Part or joint owners
2. Agents
3. Bailees
4. Tenants

Question 24

When a joint or part owner is paid in the event of a claim an amount that may exceed their actual interest, what are they considered

Answer 24

They are considered a trustee

Question 25

Who is a bailee

Answer 25

When someone holds a property on a temporary basis on behalf of the legal owner

Question 26

Bailee and Tenants interest are in respect of

Answer 26

They are in respect of possible liability

Question 27

Insurable interest also includes of potential liability

Answer 27

The extent of any potential legal liability that may incur to pay damages awarded by court and other costs

Question 28

Important principle concerning incurable interest for general non motor contract illustrated in the Luceva v craufurd (1806)

Answer 28

The expectation of acquiring insurable interest at some time in the future may not be enough to create insurable interest in general non-marine insurances