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Flashcards in CH 4 Insurable Interest Deck (28)
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1

What is Insurable Interest

This is the right to ensure arising out of a financial relationship recognized at law, between the insured and the subject-matter of insurance

2

What are the main features of insurable interest

1.financial value
2.legal relationship

3

What are the two ways subject matter is used

1.Subject matter of Insurance
2.Subject matter of the contract

4

Subject Matter of Insurance

The item or event insured. For Example car, building, or any event that can cause a legal liability

5

Subject matter of Contract

The financial interest a person has in the subject matter of Insurance

6

The Marine Insurance Act 1906(MIA 1906) stated

This was a codifying Act,it stated that any marine insurance contract was void in the absence of insurable interest at the time of any loss

7

The Marine Insurance (Gambling Policies) Act 1909 made what illegal

It made it a criminal offence to effect marine policy where either there is no insurable interest or no reasonable expectation for such an interest

8

For Marine Insurance Insurable interest is required

It must exist at the time of the loss, it does not need to exist at the inception as long as there is a reasonable expectation of interest

9

Before Life Assurance 1774 what practice did people effect

People had developed a practice of effecting life insurance policies on another person's life simply as a form of wager

10

What did the Life Assurance Act 1774 state

The act stated that there must be insurable interest at the inception of a life insurance policy, and the name of the person effecting the policy has to be shown and they can only recover the value of their interest.

11

Is insurable interest required at the time of claim of a life policy

No, there is no need of insurable interest then

12

The Life Assurance 1774 Act excluded its applications on which insurance

It specifically excluded its application on insurances of goods,ships or merchandise

13

The Gambling Act 1845 stated that

The act made all contracts of gambling or waging null and void

14

Taking general insurance where there is no insurable interest treat the contracts as

This treats the contract as gambling and therefore will have no effect. Thus a general rule is if general insurance is taken without insurable interest it is void ab initio

15

For general insurance policies like property,motor,liability e.t.c when are they subject to insurable interest

These are contracts of indemnity so they are subject to the rule of insurable interest at the time of the claim and also actual or expected insurable interest is required at the inception of the policy

16

Which law supports that general insurance policies do not require insurable interest at the inception of the policy

Williams vs Baltic Assurance Association(1924)

17

Insurable Interest of the subject matter of an insurance policy arises from

1.Common Law
2.Contract
3.Statute

18

Common law

we all owe duties to each other and have certain rights, that will give rise to insurable interest, like ownership of something, we stand to lose financially if it is lost or damaged or when you cause injury to someone through negligence, the financial aspect to this gives insurable interest

19

Contract as one of the features of insurable interest

When we get into a contract it gives us a greater responsibilities than those imposed by common law. These responsibilities/potential liabilities create insurable interest

20

Statute as one of the features of insurable interest

There are few statues/act of parliament, which impose a particular;llar duty/grant to certain groups of people, thus leading to creation or modification of insurable interest

21

Which statutes restrict liability thus limiting insurable interest

1.Carriage of Goods by Sea Act 1971
2.Hotel Proprietors' Act 1856
3.Carriers Act 1830
4.Trustee Act 1925

22

Insurable Interest generally arises from

It generally arises from ownership

23

When does insurable interest of property arises when the insured is not the full owner of the subject matter

1.Part or joint owners
2.Agents
3.Bailees
4.Tenants

24

When a joint or part owner is paid in the event of a claim an amount that may exceed their actual interest, what are they considered

They are considered a trustee

25

Who is a bailee

When someone holds a property on a temporary basis on behalf of the legal owner

26

Bailee and Tenants interest are in respect of

They are in respect of possible liability

27

Insurable interest also includes of potential liability

The extent of any potential legal liability that may incur to pay damages awarded by court and other costs

28

Important principle concerning incurable interest for general non motor contract illustrated in the Luceva v craufurd (1806)

The expectation of acquiring insurable interest at some time in the future may not be enough to create insurable interest in general non-marine insurances