Insurable Interest

Question 1

Definition of Insurable Interest?

Answer 1

By Lawrence J in Lucena v Crawford;
“if the event happens the party will gain advantage, if it is frustrated, he will suffer a loss.”
- Incomplete definition, fails to consider legal obligations for the insured to bear any loss arising from the destruction or damage of property.

Question 2

Gambling act 2005?

Answer 2

“the fact that a contract related to gambling should not prevent it’s enforcement.”
- No longer required to show proof of II at inception but common law duty under principle of indemnity to show II at TOL.

Question 3

Insurable Interest can arise from? (5)

Answer 3

1. Ownership, mortgager, mortgagee
2. Bailees
3. Landlords and tenants
4. Buyer & seller of goods
5. By statute

Question 4

Ownership, mortgager & mortgagee? (3)

Answer 4

• Both have II in property
• Both can take out separate insurance for same property
• Composite policy, both have an independent ability to make a claim & failure of one party to disclose material fact does not affect other party’s rights under policy

Question 5

Bailee? (2)

Answer 5

• II in the goods with which he is entrusted
• II in his potential liability to the bailor in the events of the goods coming to harm and in the profit or commission payable to him under bailment.

Question 6

Landlord & tenant?

Answer 6

• Landlord has II in his reversion (property)
• If tenant responsible for repairs, landlord still has II by reason of his legal estate & may recover full value from insurer, insurer can recover against tenant insurer
• Tenant has II by his possession of leased premises, if insurers premises under principle of indemnity, he may recover his own loss

Question 7

By statute?

Answer 7

• Hotel Proprietors Act 1956
  Although limiting liability of the hotel proprietor, creates a statutory obligation in return for the liability imposed.

Question 8

4 essential elements of insurable interest?

Answer 8

1. Must be a physical object which is capable of being lost, destroyed or damaged.
2. Physical object must constitute the subject matter of insurance
3. PH must have some legal relationship with that object
4. Value of that insurable interest must be measurable in monetary terms.

Question 9

Coven Spa v Hong Kong Chinese Insurance Co Ltd (1999)?

Answer 9

Judges decision that defendant insurers were not liable for cargo owners claim for shortage under a marine cargo policy.