Basic Principles of insurable interest

Pure and particular risks only could be insured Occurrence should be not against public policy Reasonable premium Insurable interest of the person insuring Subject matter of insurance- legal right or creation of liability pecuniary interest Distinction in between the wagering contract and insurance contract .

Insurable interest
The legal right to insure arising out of a financial relationship recognized under law , between the insured and the subject matter of insurance Subject mater of insurance-interest of insured Essential of in the insurable interest
 There some property,right, interest,life ,limb or potential liability capable of being insured  It is the property , right , interest which must be matter of insurance  Insured must have relationship in between the subject matter of insurance and the amount of benefits from its safety  Relationship in between the insured and subject matter of insurance recognised by law

Insurance Vs Wagering
Pecuniary interest in the insurance but not in the wagering contract Wagering-Betting Loses Some one will gain out of Losses under the insurance out of perils but in the wagering out of his own actions Insurable interest differs from one context to another

Creation of insurable interest

By common law- ownership / duty liability By contract-In some contracts person will agree to be liable for something which he or she would not ordinarily be liable forLease contract By statute-Either by granting some benefit or imposing the liability

Application of insurable interest

Individuals- unlimited insurable interest in his /her own life Family relationship Members in families or other than family members- any financial relationship arises- partners The life Assurance Act 1774( the gambling act)

Main features

No interest to the person benefiting from the insurance- Null and void No greater sum shall be recovered than the amount of insurance insured

Property insurance
The insured owner of subject matter of insurancewholly If not the following cases Part or joint venture Partial interest of members is subject to insure that extent of full value of property. If anything received as a claim> insurance interest-trustee for other members Mortgagees and mortgagors at the moment of purchasing a property. Bailee- motor garages ,launderers and so on Agents cause for insurable interest Husband and wife- mutual insurable interest

Liability insurance
Insurance interest to the extent of potential liability damages or losses Maximum liability maximum figure is worked out

Feature of insurable interest

Life:-insurable interest at the inception of policy but not during the moment of claim Marine:- The insured is only subject to the matter of loss but Insurable Interest is not required during the moment of effecting insurance Other insurances:- must be at the time of loss and inception Insurers Insurable Interest:- Reinsurance

Assignment Sec 18
- is specifically named Transfer of policy in between one person to another Change of insurable interest Vested with personal contracts approval of insurer is required Novation- new contract due to assignment of a policy Life policies- reversionary insurance

Absolute Assignment /Conditional Assignment

Absolute :- insurable interest is present or not ,but assignee acquires the entire rights and liabilities original insured.-back to original rights- reassignment Conditional :- Assignment is subject to the death of owner of policy Husband and wife

Nomination Sec 39
To receive the amount of claims after the death of insured Can be done by way of mentioning during the currency of policy but before the maturity

Nomination Vs Assignment
Advisable to the policy holder No right to sue against Without intimation nominee could be changed Not advisable Right to sue But Assignee can not be changed