Insurable Interest Flashcards
Insurable Interest
Must have it under contract of insurance if he wishes to make legally enforceable claim, without it depending on circumstances it may be void/illegal/unenforceable
Indemnity and life insurance
There are different rules in insurable interest
Problem?
If no rule about it, there it wouldn’t bar a certain mischief. Wager.
Inception?
If don’t have it at time of inception, then the policy is illegal. Unjustified Enrichment may help to get premiums back if made an honest mistake.
Policy on goods
Marine Insurance Act 1788 - Requires that names listed on policy, insurable interest must exist at time of loss.
Policy on land
Scots law required insured has a property interest at time of loss
Arif v EIG - Fire insurance no insurance on third party
Cowan v Jeffrey Associations - Fir insurance company sole owner, they haven’t sold, claim rejected
Relatives?
Don’t normally have insurable interest in relatives (child/parent) Worthington v Curtis
Only when pecuniary interest, legal right or an obligation confers insurable interest on you. Creditor may insure the life of a debtor for the amount he is owned. Godsall v Boldero
Child has an alimentary right in terms
Insurable interest in spouse or CP.
Property without insurable interest
You need ownership interest.
A possessory interest in immoveable property can suffice if the possessor has rights of enjoyment in that property OR if he may be liable for losses/damages to it, but only to the value of possessory rights.
If want to be insured against contractual liability
You can insure against it, don’t have ownership of goods, but want to have insurance
No insurable interest
A parent’s child, mere cohabitees, mere BF/GF, mere possessors of property without rights or enjoyment, tenant of a property in respect of parts of the building nor occupied by him under the lease, an unsecured creditor does not have an II in the property of his debtor, shareholder does not have an II in the property of the company
Can insure spouse maybe a fiancee
How is the issue raised?
Only raised if the insurer objects to payment under the policy on the basis. If they don’t object and pays there are no likely sanctions against the insured.
Reform bill
May insure child, grandchild, or live with as spouse or CP
Formation of Insurance Contract
It requires an offer and acceptance, and you will deal with there standard terms.
Canning v Farquhar - If risk changes then they can revoke the counter offer etc
Disclosure Requirements
ICOBS 3 imposes general disclosure duties. Distance contracts made over internet phone or post must have relevant and clear info given to the customer in a durable form in good time before any contract is concluded
Need to disclose: Name, Payment requirements, total price, full details of cancellation
ICOBS 6.2.5 Firm must provide a consumer with information on the right to cancel a policy.
ICOBS 7 - General insurance customer who has been told of his right to cancel, 14 days to cancel
Formalities
Marine needs to be writing, others don’t need to be but usually want all be temporary cover in writing.
Life and Motor Insurance
Consquence of EU and UK Law
Insurer bound
Sickness and Accident Assurance Association Ltd v General Accident Assurance Corpn Ltd - Insurer stated that cover does not commence until payment of first premium.
Cover Notes
Insurance via agent and they might give you cover there and then, which is a contract even if limited duration. It can be oral.
Can end via:
Expiry,
Replacement with a new policy,
Operation of an express term allowing such cancellation by the insurer
If superseded then need to kill it via reference
Temporary cover at end of policy
Taylor v Allan - Time of renewal, enter into new contract. Had a period of grace after policy expired, arrested for driving without insurance on 15th day. Grace period only existed in relation to continuing with company
Insurer in relation to cover notes
If they want there standard terms in the cover not must incorporate them.
Re Colemans Depositories - Standard terms need to be clearly incorporated
Duration
Insurance policy is determined by its contract terms, including the right of the insurer to cancel the policy. There doesnt need to be any right for the insured to renew policy.
Cancellation by insurer - policy may require notice or immediate cancellation.
Sun Fire Office v Hart - Fire caused, a couple of fires and civil unrest, cancelled policy and it was okay
General Accident Assurance v Chandermull Jain - Flood might be coming and cancelled policy it was okay
Risk must not yet have occurred and insurer must return premiums pro rata
Life Insurance - Based on age and stage life, if keep paying preminmums then thought to be paid as the policy is assumed to be continued not replaced.
ICOBS 5 - Most allow days of grace
When the insurer won’t pay
If risk is not covered No insurable interest Payment contrary to public policy Policy is void/voidable/discharge Claim is repudiated
Contract might be void
Illegality
Error
Unlawful use of property
Contract may be voidable
By insurer if the insured party may fail to live up to disclosure under contract. Fails to comply with duty of fair presentation.
Insurance Policy
Discharged when they breach warranty
Breach of fundamental term discharges the contractual obligation. This is traditional
2015 Act
Denying a Contract/Claim
Insurance terms called conditions will offer a potential to the insurer to repudiate the contract if they are so drafted as to be suspensive conditions to the insurer’s liability to any claim, and are then breached by the insured, but if there is a causal connection between the breach of condition and the loss
A condition might also delimit what the risk is, which would subject insurer to liability if it continues to be complied with by the insured.
Loss of Insurer’s Right to Repudiate
There is a possible breach when the insurer will loss its right to repudiate if: waive breach, affirm a breach, become personally barred fro asserting a breach
Sometimes an indisputably clause may be put in a life policy so after a certain point so that the insurer can’t make defences to it.
