Insurer's Tort Liability for Issuing Policy without Insurable Interest--A Comment

Abstract

The rule which requires an insurable interest in the object or person insured has more often than not been a benefit to the insurer than to the insured. It is the insurer who raises it in defense to an action to recover the proceeds, and who escapes liability if it is shown lacking.l Not even a waiver of the requirement may be proved against the insurer.2 And not infrequently the insurer is permitted to keep the premiums collected on the policy.3 The want of insurable interest usually has been a matter of importance when a contractual obligation between the parties to the policy was being contested. Never until recently was it used to undergird a tort action against an insurance carrier. Thus it is of special interest that the first attempt to take the ingredient of insurable interest out of its contractual context and employ it in support of a tort action was successful. The case in mind is Liberty Nat'l. Life Ins. Co. v. Weldon.4 An aunt purchased from the three defendant insurers separate policies on the life of her niece, naming herself as the beneficiary of the policies. Alabama law did not recognize an insurable interest in the aunt-niece relationship per se.s There being no financial interest in the continuance of the child's life, she neither living with nor being supported by the aunt, the latter was totally lacking in insurable interest. The policies were, therefore, void and unenforceable, a point conceded by all parties. The aunt then murdered the niece by feeding her arsenic. The aunt was executed. A wrongful death action6 against the insurers was subsequently instituted by the father of the child, who predicated the case on the proposition that the acts of issuing