Chapter 4: Insurable Interest Flashcards
Define insurable interest
The legal right to insure rising out of a financial relationship, recognised in law, between the insured and subject matter of the insurance
When must insurable interest exist?
Hint: can depend on kind of insurance
Marine: At the time of a loss, but not at the time of inception provided there is an expectation of insurable interest arising
General: At inception + loss
Life: Inception not loss
What are the 3 ways insurable interest can be created?
- Common law (eg ownership)
- Contract (eg tenancy agreement)
- Statute (Acts of Parliament)
What is a bailee and do they have insurable interest?
Someone that temporarily holds property on behalf of the legal owner eg a dry cleaner
Yes because if the property was lost or damaged they would be liable
What 3 things must exist for there to be insurable interest?
Subject matter
Financial value
Legal relationship
Does have a tenant have insurable interest in the property they live in? Why/why not?
Yes because they may be liable for repairs to damages so they have a financial interest
When can you arrange an insurance policy for property you do not own?
When you are acting as an agent on the owner’s behalf
A married couple have life insurance policies on each other. Are the policies still valid in the event of a divorce?
Yes, life insurance policies only require insurable interest at the time of inception not at the time of a claim
In reinsurance, what is the subject matter of the contract?
The insurer’s financial interest in the original insurance contract
Can you insure stolen property?
No because your financial relationship with the property is not recognised in law - you do not have ownership
What aspect of insurable interest comes from the case of Lucena v. Crawford 1806?
Hint: Does not apply to marine
The expectation of acquiring insurable interest in the future may not be enough to create insurable interest
What statutes create or modify insurable interest under certain circumstances?
Settled Land Act 1925
Repair of Benefice Buildings Measure Act 1972
