Chapter 4 Flashcards

1
Q

Define ‘insurable interest’

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the three features of insurable interest?

A

Subject-matter, legal relationship and financial value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is subject-matter of insurance?

A

The item/event insured e.g. cars/houses/valuables/stock. It can be anything that results in a loss of legal right or the creation of legal liability.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is subject-matter of the contract?

A

The financial interest a person has in the subject-matter of the insurance (Castellain v Preston 1883)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Legal relationship

A

The relationship between the insured and the subject-matter of the insurance must be recognised in law. If there is no legal relationship, there is no insurable interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Financial Value

A

The insurable interest in the subject-matter of insurance must have a financial value.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Insurers’ insurable interest

A

Insurers are able to share the risk with other insurers because they themselves have insurable interest in the risks that they have assumed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Which classes have different timings for timing of insurable interest?

A

Marine insurance, Life Insurance, General Insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Insurable interest: Marine Insurance

A

The Marine Insurance Act 1906 stated that any marine insurance contract was void in the absence of insurable interest at the time of loss. The Marine Insurance Act 1909 made it a criminal offence to effect a marine policy where either there is no insurable interest, or there is no reasonable expectation of such an interest. SUMMARY: Insurable interest must exist at the time of a loss but not exist at inception, provided there is a reasonable expectation of interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Insurable interest: Life Insurance

A

There must be an insurable interest at the inception of a life policy, but there need be no valid insurable interest at the time of a claim.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Insurable interest: General Insurance Contracts

A

A general rule is 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 interest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

When is insurable interest created?

A

Common law, contract, statue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Common Law

A

We all owe duties to each other and have certain rights under common law which gives rise to insurable interest e.g. ownership

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Contract

A

There are situations in which we accept greater liabilities than those imposed by common law. These occur when we enter a contract that gives us greater responsibilities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Statute

A

There are a few acts of Parliament which impose and particular duty on, or grant some benefit to , certain groups of people and so creating or modifying insurable interest. Where these statues apply they make tenant responsible for the upkeep of the buildings they occupy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Application of insurable interest can be easily applied to what two types of insurance?

A

Property and Liability

17
Q

Application of insurable interest to property insurance

A

Generally arises out of ownership. Insurable interest can still arise when the insured is not the full owner of subject matter e.g. part/or joint ownership, agents, bailees and tenants.

18
Q

Liability Insurance

A

Under common law a person has insurable interest to the extent of any potential legal liability that they may incur to pay damages awarded by a court and other costs.

19
Q

Name an example of a statute restricting liability and therefore insurable interest?

A

The Hotel Proprietors’ Act 1956.

20
Q

The case of Castellain v Preston (1883) laid down an important principle with regard to which of the following features of insurable interest?

A

The subject-matter of the contract.

21
Q

Which of the following statutes makes tenants responsible for the upkeep of the buildings they occupy, giving them an insurable interest?

A

The Hotel Proprietors’ Act 1956