Insurable Interests

Abstract

A traditional feature of a contract of insurance is that the insured has an “insurable interest” in the subject matter of the insurance. It is the potential effect upon the insured of the occurrence of a future risk that most obviously distinguishes a contract of insurance from a simple wager. The requirement of the modern law that an insured must have an insurable interest in the subject-matter of the insurance is derived from the statutory avoidance of wagering contracts. The rationale for the requirement that the insured has an insurable interest in the insurance is derived solely from public policy rather than the nature of the contract itself. This chapter outlines three statutes relevant to the enforceability of a contract of insurance made without interest: The Life Assurance Act 1774; The Marine Insurance Act 1906; and The Gambling Act 2005. The nature of the interest required depends upon the subject-matter of the insurance.