Insurable Interest

Overzicht

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.

Doelstellingen

  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

Lesnotitie

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.

Lesevaluatie

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Je zult een mix van vraagtypen tegenkomen, waaronder meerkeuzevragen, korte antwoordvragen en essayvragen. Elke vraag is zorgvuldig samengesteld om verschillende aspecten van je kennis en kritisch denkvermogen te beoordelen.

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  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

Aanbevolen Boeken

Principles of Risk Management and Insurance
Principles of Risk Management and Insurance
Ondertitel: Thirteenth edition
Uitgever: Pearson
Jaar: 2016
ISBN: 978-0-13-408257-8
Beschrijving: The standard introduction to risk and insurance, covering risk management, insurer operations and the main lines of life, health, property and liability cover.
Fundamentals of Risk and Insurance
Fundamentals of Risk and Insurance
Ondertitel: Tenth edition
Uitgever: Wiley
Jaar: 2008
ISBN: 978-0-470-08753-4
Beschrijving: A clear account of the nature of risk and the economics of insurance, written for beginning students across life, health, property and liability insurance.
Fundamentals of Insurance
Fundamentals of Insurance
Ondertitel: Second edition
Uitgever: Himalaya Publishing House
Jaar: 2017
ISBN: 978-93-5097-079-9
Beschrijving: An accessible treatment of insurance in four parts: the basics of risk, insurance management, life insurance and non-life insurance.

Eerdere Vragen

Benieuwd hoe eerdere vragen over dit onderwerp eruitzien? Hier zijn een aantal vragen over Insurable Interest van voorgaande jaren.

WAEC SSCE - Insurance - 2015

Vraag 1 Verslag

List and explain five principles of insurance.

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