Insurance WAEC

Insurable Interest

Aperçu

You may insure your own car, but you may not insure your neighbour's. You may insure your own life for any amount, yet you may insure a stranger's for nothing at all. The rule that draws this line is insurable interest, and it is what separates a genuine insurance contract from a bet. Without it, a policy is not merely unpaid at claim time: in law it never existed.

This lesson explains what insurable interest is, the essential features the law looks for before it recognises the interest, and the one point examiners test most: the exact moment the interest must be present, which differs for life, for marine and for fire and motor cover. You will apply the rule to decide who may validly insure what, and see why a policy taken out without it is simply void.

Objectifs

  1. Define insurable interest and explain why the law requires it
  2. State the essential features that must be present before insurable interest exists
  3. Explain when insurable interest must attach in life, marine and property insurance
  4. Apply insurable interest to decide whether a named person may validly insure a stated subject matter
  5. Explain the consequence of effecting a policy without insurable interest

Carte mentale

Ce theme est schematise pour montrer comment les idees se relient.

Cartes memoire

Entrainement rapide sur les faits evalues dans ce theme.

Note de cours

Suppose you could walk into an office and insure the shop across the road, a shop you do not own and have never set foot in, for ₦20,000,000. If it burned down you would collect a fortune; if it stood, you would lose only your premium. That is not insurance. It is a wager on somebody else's misfortune, and it hands you a reason to wish the shop harm. The law shuts this door with a single requirement: before anyone may insure a thing, they must stand to lose financially if that thing is damaged, destroyed or, in the case of a life, ended. That financial stake is insurable interest, and it is the first question a claims officer asks.

Évaluation de la leçon

Félicitations, vous avez terminé la leçon sur Insurable Interest. Maintenant que vous avez exploré le concepts et idées clés, il est temps de mettre vos connaissances à lépreuve. Cette section propose une variété de pratiques des questions conçues pour renforcer votre compréhension et vous aider à évaluer votre compréhension de la matière.

Vous rencontrerez un mélange de types de questions, y compris des questions à choix multiple, des questions à réponse courte et des questions de rédaction. Chaque question est soigneusement conçue pour évaluer différents aspects de vos connaissances et de vos compétences en pensée critique.

Utilisez cette section d'évaluation comme une occasion de renforcer votre compréhension du sujet et d'identifier les domaines où vous pourriez avoir besoin d'étudier davantage. Ne soyez pas découragé par les défis que vous rencontrez ; considérez-les plutôt comme des opportunités de croissance et d'amélioration.

  1. Insurable interest is best described as: A. The premium a person pays for a policy B. A legally recognised financial stake a person has in the thing insured C. The profit an insurer makes on a contract D. The affection a person feels for another Answer: B
  2. In which class of insurance must insurable interest exist only at the time of loss? A. Life assurance B. Fire insurance C. Marine insurance D. Motor insurance Answer: C
  3. A creditor lends 1,000,000 naira at an agreed interest of 200,000 naira. The maximum insurable interest the creditor has in the debtor's life is: A. 1,000,000 naira B. 200,000 naira C. 1,200,000 naira D. 800,000 naira Answer: C
  4. A policy effected without any insurable interest is: A. Valid but non-transferable B. Void and treated as a wager C. Payable only in part D. Converted into a life policy Answer: B
  5. Which of the following persons does NOT have an insurable interest? A. A husband in the life of his wife B. A dry cleaner in the clothes left in his custody C. A man in the new car of a colleague he admires D. A joint owner in the jointly owned house Answer: C

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Questions de révision

Vous vous demandez à quoi ressemblent les questions passées sur ce sujet ? Voici plusieurs questions sur Insurable Interest des années précédentes.

WAEC SSCE - Insurance - 2015

Question 1 Rapport

List and explain five principles of insurance.

Détails de la réponse

Five principles of insurance

  1. Utmost good faith (uberrimae fidei): Both parties to the contract, and especially the proposer, must disclose all material facts truthfully and completely. Concealment or misrepresentation of a material fact makes the contract voidable at the option of the insurer.
  2. Insurable interest: The insured must have a legal or financial relationship with the subject matter such that he benefits from its safety and suffers loss from its damage or destruction. Without insurable interest the contract is void because it would amount to gambling.
  3. Indemnity: The insurer undertakes to restore the insured, so far as money can, to the exact financial position he occupied immediately before the loss, no better and no worse. This prevents the insured from making a profit out of a loss. (It does not apply to life and personal accident.)
  4. Subrogation: After indemnifying the insured, the insurer takes over the insured's legal rights and remedies against any third party responsible for the loss, so that the insurer can recover its outlay. This supports the principle of indemnity.
  5. Contribution: Where the same risk is insured with more than one insurer, each insurer shares the loss rateably in proportion to the sum it insured, so that the insured recovers only the actual loss once and not more.

A further principle is proximate cause, under which the insurer is liable only where the nearest, most effective cause of the loss is a peril insured against.

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