Insurable Interest

Front 1

Life Assurance Act 1774

Back 1

Governs life insurance.

Front 2

Dalby v India and London Life Assurance Co (1854)

Back 2

Held that the policyholder must have an insurable interest in the life assured at the date of the policy, but not at any point thereafter.

Front 3

Wainewright v Bland (1835)

Back 3

The policy is illegal when the policyholder obtains the policy with the intention of assigning it to a person without interest.

Front 4

Griffiths v Fleming [1909]

Back 4

A person is presumed to have an insurable interest in his or her own life, preferring to be alive and in good health rather than being sick, injured or dead. This interest extends to spouses, even if there is no financial dependency.

Front 5

Harse v Pearl Life Assurance Co Ltd [1904]

Back 5

An adult child insured the life of his mother who cooked and kept house for him. The insurance for said to be for the purpose of funeral expenses. The court found that the policy was void for lack of interest. There was no obligation for a son to incur financial expense in burying his mother, the council would cover it if necessary, and therefore was no legal obligation for the mother to keep house for her son.

Front 6

Halford v Kymer (1830)

Back 6

A father has insured the life of his son. Payment of the fund was refused by the insurers on a ground of lack of interest, and in this they were sustained, the court holding that the interest must be pecuniary in its nature. Mere love and affection will not suffice.

Front 7

Hebdon v West (1863)

Back 7

This case made the point that if the insured covered his interest in one contract, he could not take out another policy, even if the sum assured inn that policy alone is less than the amount of his interest because as it was held, if this were otherwise, the effect of the statute would be defeated as a small amount of II might be made the foundation for a great number of insurances, each the amount of the whole interest of the insured.

Front 8

Fuji Finance Inc v Aetna Life Insurance Ltd [1997]

Back 8

This case concerned the nature of a single premium capital investment bond taking the form of life insurance. It was held at first instance that the contract was not insurance because there was uncertainty about when the money would become payable and it did not chiefly depend on the life insured. However the CA arrived at a broad definition of life insurance- namely that the essence of life insurance is the right to benefits is related to life or death. The court decided that therefore the bond was insurance.

Front 9

Feasey v Sun Life Assurance Co of Canada [2003]

Back 9

found that the rules on proving insurable interest for policies on many lives over long period of time were less strict. This would assist the position of group schemes.

Front 10

Property Insurance

Back 10

The 1774 Act does not apply to property insurance. However the requirement of insurable interest is inherent in the nature of the contract. However, this need only be shown (in most cases) at the time of loss, and, because it is simply a contractual requirement, it can dispensed with if the contract can be so construed. This allows for situations where someone can insure the interest of a third party.

Front 11

Lucena v Craufurd (1806)

Back 11

The interest must be a current one. It was said here that a person had an insurable interest on a thing if he will be prejudiced by its loss.

Front 12

Macaura v Northern Assurance Co [1925]

Back 12

The interest must be a legal one. Macaura owned an estate, on which he sold timber. He bought insurance policies covering for fire. The HOL held that the insurers were not liable, since the timber which perished in the fire did not belong to Macaura.

Front 13

Constitution Insurance Co of Canada v Kosmopoulos (1987)

Back 13

The case is also a leading source of insurance law. The insurer refused to indemnify Mr. Kosmopoulos on the grounds that the corporation owned the property, even though he was the sole-shareholder of the corporation.

Front 14

Inglis v Stock (1885)

Back 14

This case involved sugar being shipped. The ship and sugar were lost after shipment; the goods were paid for by the buyer. The buyer claimed on his insurance policy. Held that the buyer had an II because the goods were at his risk from the time of shipment.

Front 15

Feasey v Sun Life Assurance Co of Canada [2003]

Back 15

found that the rules on proving insurable interest for policies on many lives over long period of time were less strict. This would assist the position of group schemes.

Front 16

Mark Rowlands Ltd v Berni Inns Ltd [1986]

Back 16

The 1774 act does not apply to property insurance.

Front 17

Thomas v NFU Mutual Insurance Soc [1961]

Back 17

You can waive the need for an II in property insurance.

Front 18

Hepburn v Tomlinson (Hauliers) Ltd [1966]

Back 18

“A person could insure the full value of property which he did not own and in which he did not have the exclusive insurable interest, holding the proceeds of the policy for himself in so far as they covered his own interest (in the property) and the balance as trustee for the owner”.

Front 19

Petrofina (UK) Ltd v Magnaload Ltd [1983]

Back 19

The main contractors on a site took out contractor’s all risk insurance to include damage to property. The insureds were defined as including main contractors, sub-contractors, owners and lessees of the site. Serious damage was caused by the negligence of what was a sub-sub-contractor. The owners were compensated under the policy and the insurers sought to subrogate against the negligent party, who in their defence argued that they were insureds within the policy definition. The insurers countered that, if the defendants were insured under the policy, then their interest extended only to their own property and not to the damaged property. The subrogation claim failed. The curt was prepared to extend the bailee principle from waters and Hepburn and found a head contractor could insure entire sub contractor group.

Front 20

Vandepitte v Preferred Accident Insurance Corp of New York [1933]

Back 20

Supreme Court of Canada said that there was no agency because there was no intention to include Jean on the policy.
Preferred Accident Insurance argues that there was no contract between them and Jean Berry, only between them and the father. Vandepitte argues that there was a relationship created both in agency and in trust.

Front 21

Contracts (Rights of Third Parties) Act 1999

Back 21

Is applicable in Insurance Law.

Front 22

Grover & Grover v Matthews [1910]

Back 22

The principal attempted to ratify a contract of fire insurance after a fire had destroyed the property concerned. It was held that the contract could not be ratified, because at the time of the ratification the principal would not have been able to insure the property.

Front 23

National Oilwell (UK) Ltd v Davy Offshore Ltd [1993]

Back 23

There was strong inference that the agents authority to insure was co-extensive with its obligation to do so, but they could only bind the principal to a policy that was specified in the contract.