Page 18 - Motor Insurance Ebook IC 72

The Insurance Times

indemnity from wager. The competency of a person in
law to affect a contract of insurance is determined by
his legal pecuniary relationship to the subject matter.
This legal pecuniary relationship is known as insurable
interest. Insurable interest gives a person legal right to
insure the subject matter.

Basic features of insurable interest:
i) The existence of property exposed to loss, damage

or a potential liability;
ii) Such property or liability must be the subject matter

of insurance;
iii) The insured must bear a legal pecuniary relationship

to the subject matter so that he would benefit by its
safety or would suffer financial loss in the form of
physical damage or creation of liability because of
its loss or damage.

Application of the principle of insurable interest in motor
insurance

Damage to vehicle.
1. Owner's insurable interest in vehicle - The motor

vehicle, which is the subject matter of motor
insurance, is exposed to loss by theft or damage
due to an accident. Such loss or damage would
cause financial loss to the insured. This entitles the

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