IF1.4 - Insurable Interest Flashcards
Define insurable interest
the legal right to insure arising out of a financial relationship recognised at law, between the insured and the subject-matter of insurance
Define subject matter of insurance
the item or event to be insured e.g. car
Define subject matter of the contract
The financial interest a person has in the subject matter of the insurance
In general insurance, when must an insurable interest exist?
at inception and at the time of loss (although a looser connection at time of inception be be sufficient, e.g. about to buy a car)
In life insurance contracts, when must an insurable interest exist?
at inception but not at time of loss
In Marine insurance, when must an insurable interest exist?
the time of loss but not at inception (provided an expectation of interest)
expected insurable interest
if you plan to buy something an insure it before that date.
What are the three ways that insurable interest is created?
- common law
- contract law
- statutes
How does common law create an insurable interest?
Ownership - we stand to lose financially if it is lost of damaged. e.g. buying a car.
How does contract law create insurable interest?
When we enter a contract we get greater responsibilities or potential liabilities which are insurable interests. e.g., renting a property where you are liable for certain maintanence.
How do statutes create insurable interests
certain statutes give people responsibility that can be insurable interest (similar to contract law), or can restrict liability (therefore restricting insurable interests).
What is a statute?
Legislation for certain groups of people.
What are some examples of relationships between the insured and the insurable interest?
- Owner (full or joint)
- Agent acting on behalf of principal
- holding property on a temporary basis (bailee)
- Tenancy
Good faith
disclosure must be made in a reasonable and accessible way
A person has insurable interest if they have… (ll)
any legal liability that may cause them to pay damages.
