Chapter 4 Flashcards
Definition of insurable interest
It is the legal right to insure arising out a financial relationship recognised at law, between the insured and the subject matter of insurance.
What is a subject matter?
The item or event that is insured. The most obvious examples are cars, houses, valuables or factory stock or liability for acts of negligence.
Subject matter of contract
The financial interest a person has in the subject-matter of the insurance, as defined in the case.
Legal relationship
The relationship between the insured and the subject matter of the insurance must be recognised at law.
Financial value
The insurable interest in the subject matter interest of insurance must have a financial value. Unlike other types of contract that may be concerned with performance or some other obligation.
Insurers insurable interest
Insurers share with other insurers. They can do this because they themselves have insurable interest in the risks that they have assumed.
Insurable may arise under…
Common law
Contract
Statute
Common law
We all owe duties to each other and have certain rights under common law. (Gives rise to insurable interest)
Contract
These are 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. However, the landlord may make the tenant liable under the terms of the lease.
The imposition of these responsibilities of potential liabilities creates insurable interest.
Statute
There are few statutes (Acts of Parliament) which impose a particular duty on, or grant some benefit to certain groups of people, creating groups of modifying insurable interest.
Where these statutes apply they make tenants responsible for the upkeep of the buildings they occupy, giving them insurable interest.
What are the main features of insurable interest?
Subject matter
Legal relationship
Financial value
For life insurance when must insurable interest exist?
At inception
For marine insurance when must insurable interest exist?
When the claim is made
For general insurance when must insurable interest exist?
It must exist when a claim is made and usually at inception, though its not absolute provided the contract is not a wager or a gamble
With property insurance when does insurable interest arise?
It usually arises out of ownership although certain others, who are not the full owner, can also have insurable interest
