INSURABLE INTEREST

1. INSURABLE INTEREST Lecture 17 Week 9

2. INSURABLE INTEREST • Applies to all policies • Linked to indemnity where indemnity policy • In non-indemnity policies governed by statute

3. DEFINITION • There must be some person or thing exposed to a loss or some potential liability • This must be the subject matter of the insurance • The insured must bear some relationship to the insured thing whereby s/he stands to benefit by its safety or be prejudiced by its loss or by incurring liability • See Lucena v. Crauford (1806)

4. MARINE INSURANCE • Marine Insurance Act, 1745 • Voids policies on ships where no insurable interest • Marine Insurance Act 1789 • Applied to Cargo • Marine Insurance Act 1906 • Repealed 1745 and 1789 act • Declares void all marine insurance polices where insurable interest does not apply at time of loss

5. APPLICATION OF ACTS TO IRELAND • Life Assurance Act 1774 incorporated into Ireland through the Life Assurance (Ireland) Act 1886 • Marine Insurance Act 1745 does not apply • Keith v. Protection Marine Insurance Co of Paris • Marine Insurance Act 1906 seems to have been accepted as part of Irish law.

6. WHO HAS INSURABLE INTEREST • Lucena v. Crauford • Insurable interest exists where insured stands in a legal relationship to the property or otherwise stands to suffer loss as a result of its destruction • Macaura v. Northern Assurance (1925) • Shareholder does not have interest in property of company • Creditor does not have interest in debtors property although does have an interest in their life

7. O’LEARY v. THE IRISH NATIONAL 1957 • Murphy loaned car to son who had an accident causing shock to a pregnant women leading to the death of the foetus. • Stephen Murphy, the father, had insured the car in his own name with Andrew, his son, as a named driver. • Evidence showed Andrew owned car. • Therefore Stephen had no insurable interest. • Policy void from inception

8. LIFE INSURANCE • Life Assurance Act 1774 (UK) • Aimed at preventing gambling • The act forbade: • The making of any policy on the life or lives of any persons or persons, or on any other event or events whatsoever, wherein the person or persons for whose use, benefit, or on whose account such policy or policies shall be made, shall have no interest or by way of gaming or wagering.

9. CHURCH AND GENERAL INS v. CONNOLLY AND MCLOUGHLIN (1980) • Insured Committee Bandon Youth Centre: Defandants were tenants although exact relationship not known and claimed for building and contents • Were found to be tenants at will and had insurable interest • Could insure not only for limited interest but wider interest of owners

10. WHEN MUST INSURABLE INTEREST EXISTS • Three positions • At time of entering into the policy • At time of loss • Both

11. AT TIME OF ENTERING INTO THE POLICY • Life Assurance Act 1774 and 1886 (Ireland) Act • Thus all life policies only need to have insurable interest at time policy taken out. (Dalby v. India and London Life) • Question as to whether Act applies to motor was settled by MIBI v. PMPA Insurances 1981 and buildings C& G v. Connolly and McLoughlin (1980)

12. AT TIME OF LOSS • See Marine Insurance Act 1906 • Requires insured has an insurable interest at the time of the loss and not at inception of policy.

13. BOTH • Policies of indemnity have to have insurable interest both at time of loss and at time of inception unless it escapes the Life Assurance Act 1774 and Life Assurance Act 1886 • 1886 Act applied 1774 act to Ireland.

14. LIFE ASSURANCE ACTS • 1774 Act referred to life but excluded ships goods and merchandises which implies things not falling within this definition are included • 1886 act only refers to lives therefore does problem with 1774 act still apply

15. WHO HAS INSURABLE INTEREST - IRELAND • Carrigan v. Norwich Union Fire Society Ltd and others (1987) • Held shareholder had beneficial interest in company property • Was shareholder in a company owning a building

16. QUESTIONS