Insurance guide - e.g. insurable interest

UK Principles of Insurance - Examples of Insurable Interest

The following are examples of the basic legal principles of insurance in practice - 'Insurable Interest'.

A person has, say, a motor car insured against third party risks, the particular car being specified in the policy. The policy also provides that the person is also covered when using another car, other tahn a hired car, in place of his own vehicle. If he sells the first vehicle, obtains a new one and sustains an accident while he is driving it, he is not covered by the insurance as his policy relates to the old car, in which he no longer has an insurable interest and therefore is unable to make a claim in respect of the new car.

A person is deemed to have an insurable interest in his own life to an unlimited extent. A husband and wife have an insurable interest in each other. A parent has no insurable interest in a childs life (except if it arises under pecuniary loss). Vice versa applies also.

A creditor has an insurable interest in his debtors life, to the extent of the debt. A debtor does not have an insurable interest in his creditors life.

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