Chapter 5 Key Points Flashcards
when does an insurance contract come into existence
once the offer made by one party is unconditionally accepted by the other
when do the rules of consideration apply to insurance
consideration given by the insured in an insurance contract is the premium (or promise to pay the premium) and that by the insurer is the promise to pay claims
what is insurable interest
arises out of a financial relationship recognised at law between the insured and the subject matter of insurance, it means that the policyholder must have the legal right to insure
what are the key elements of insurable interest
a subject matter of insurance
the policyholder must have an economic or financial interest in that subject matter
the interest must be a current interest
the interest must be a legal interest
why does the law require insurable interest
to reduce moral hazard and to discourage wagering
how can insurable interest arise
common law
through a contract
how can insurable interest arise though common law
interest is automatically assumed (e.g. every person is presumed to have an interest in their own life)
how can insurable interest arise through a contract
a person may agree to accept responsibility for something for which they would not ordinarily be liable (e.g. a landlord rather than the tenant is normally liable for the maintenance of the property which they own)
which act requires insurable interest for marine insurance
the marine insurance act 1906 s.4
what does the marine insurance act 1906 s.6 provide
that the insured must be interested in the subject matter insured at the time of the loss
does marine insurance require insurable interest when the contract is made
no, and it does not matter that the interest has ceased since the time of the loss
which act requires insurable interest for life insurance
the life assurance act 1774, s.1
when is insurable interest required for life insurance
at the time when the contract is made, i.e. at inception
no requirement to prove an interest when a claim arises on death or maturity of the policy
when is insurable interest required for insurance policies on goods
there is no statutory requirement, as a consequence of the gambling act 2005, a policy on goods without insurable interest is enforceable in theory, even if it amounts to a wager
what happens to a contract with no insurable interest
it is generally void
