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4/6 W01/March 2017 Award in General Insurance

Key points

The main ideas covered by this chapter can be summarised as follows:
Definition of insurable interest
• Insurable interest is the legal right to insure arising out of a financial relationship recognised at law, between the
insured person and the subject-matter of insurance.
• The main features of insurable interest are subject-matter, legal relationship and financial value.
Timing of insurable interest
• When insurable interest must exist depends on the type of insurance.
• For life assurance it must exist at inception, for marine insurance it must exist when a claim is made and for general
insurance it must exist both at inception and when a claim is made.
Creation of insurable interest
• Insurable interest can arise at common law, under contract or under statute.
4 Application of insurable interest
Chapter • With property insurance, insurable interest usually arises out of ownership, though certain others, who are not the

full owner, can also have an insurable interest.
• A person has insurable interest to the extent of any potential legal liability that they may incur to pay damages
awarded by a court and other costs. Reference copy for CII Face to Face Training