Chapter 4: Insurable Interest

Question 1

What is insurable interest?

Answer 1

A legal right to insure something. Arising out of a financial relationship at law.

Question 2

State the difference between the subject matter of insurance and the subject matter of the contract.

Answer 2

• Subject matter of insurance - the thing insured.
• Subject matter of the contract - the financial interest in the thing insured.

Question 3

What are the requisites for a subject matter?

Answer 3

• Must be a legal relationship between the person taking out cover and the thing covered.
• The thing must have financial value.

Question 4

When must insurable interest exist for general insurance contracts?

Answer 4

Both at inception and at the time of a loss. Though a lesser connection may be allowed at inception. (Williams v Baltic Assurance Association).

Question 5

When must insurable interest exist for life insurance contracts?

Answer 5

Inception only.

Question 6

When must insurable interest exist for marine insurance contracts?

Answer 6

At time of loss only.

Question 7

Can anticipated insurable interest suffice?

Answer 7

Not always. E.g. Lucena v Craufurd (legal heir cannot expect to inherit an estate)

Question 8

Where is insurable interest created?

Answer 8

• Common law
• Contract
• Statute (may reduce insurable interest e.g. Carriage of Good by Sea Act 1971)

Question 9

Who has insurable interest in property insurance?

Answer 9

• The owner(s) (part owners will be regarded as trustees of the other owners)
• Agents (where principle has insurable interest)
• Bailees
• Tenants

Question 10

Give an Act which restricts liability and therefore insurable interest.

Answer 10

• Hotel Proprietor’s Act 1956
• Carriers Act 1830
• Trustee Act 1925

Question 11

Give an Act which creates insurable interest.

Answer 11

• Settled Land Act 1925