Chapter 4

Question 1

Define insureable interest

Answer 1

Insurable interest Is legal right to insure arising out of a financial relationship recognised at law between the insured and the subject-matter of insurance

Question 2

Subject matter of insurance

Answer 2

Item or event insured

Question 3

Subject matter of a contract

Answer 3

Financial interest a person has in the subject-matter of the insurance as defined in the case of Castellain .v Preston 1883

Question 4

Common law

Answer 4

we all own duties to each and have certain rights under common law. These give rise to insurable
interest. These give a rise to insurable interest. The most straightforward is ownership

Question 5

Contracts

Answer 5

re situations in which we accept greater liabilities than those imposed by common law; these
occur when we enter into a contract that gives us greater responsibilities. A landlord is normally liable for the maintenance of the property they own

Question 6

Statute

Answer 6

here are a few statutes which impose a particular duty on or grant some benefit to certain group of
people, this creating or modifying insurable interest

Question 7

Legal Relationship

Answer 7

between the insured and the subject matter of the insurance must be recognised in law.

Question 8

Financial Value

Answer 8

in the subject matter of insurance must have a financial value

Question 9

Bailee

Answer 9

Where someone holds property on a temporary basis on behalf of the legal owner, they are a bailee. They have an insurable interest in the property, since if it is
damaged or stolen they may have to replace it. Examples of bailees include shoe repairers, garage owners and dry cleaners

Question 10

Agents

Answer 10

Where a principal has insurable interest, their agent can insure on their behalf.

Question 11

Life insurance contracts

Answer 11

Insureble interest must exist at inception

Question 12

Marine insurance contracts

Answer 12

Insurable interest must exist at the time of a loss but need not exist at inception, provided that there is a reasonable expectation of interest.

Question 13

General insurance

contracts

Answer 13

A general rule that insurable interest must exist both at inception and at the time of a loss, though some connection other than a full insurable interest may be
sufficient at inception.

Question 14

What 3 things must exist for there to be insurable interest?

Answer 14

Subject matter
Financial value
Legal relationship

Question 15

In reinsurance, what is the subject matter of the contract?

Answer 15

The insurer’s financial interest in the original insurance contract

Question 16

What aspect of insurable interest comes from the case of Lucena v. Crawford 1806?
Hint: Does not apply to marine

Answer 16

The expectation of acquiring insurable interest in the future may not be enough to create insurable interest

Question 17

What statutes create or modify insurable interest under certain circumstances?

Answer 17

Settled Land Act 1925

Repair of Benefice Buildings Measure Act 1972