Marine Cargo Insurance



The insurable interest requirement defined

The requirement for an insurable interest

4.1 The requirement for an insurable interest reflects the principle of indemnity that applies to cargo insurance in common with other forms of property insurance. The principle of indemnity requires that the assured must show that he has suffered a loss.1 The nature of the “loss” that has to be suffered under the indemnity principle to support a claim is defined, so far as cargo insurance is concerned, in terms of the assured standing in a legal or equitable relationship to the adventure or to any insurable property at risk.2 The importance to cargo underwriters of insurable interest may be seen as twofold. Firstly, an interest in the successful outcome of the adventure is perceived as providing an incentive to the assured to ensure that, for example, the goods are sufficiently packed3 and that reputable carriers by sea, land or air will be employed.4 Secondly, the existence of an insurable interest, flowing from the principle of indemnity, safeguards cargo underwriters from being exposed to the risk of a double payment. This is particularly significant where goods have been traded as it is the principle of indemnity that enables insurers to be satisfied that the assured, whether seller or buyer, has suffered the loss. 4.2 The requirement for an insurable interest appears to have originated through prohibitions against gambling.5 The Marine Insurance Act 1788 introduced an analogous requirement that a policy on goods identify the person interested.6 However, the issue today is not whether the contract is one of gaming or wagering, but whether there is an insurable interest. Accordingly, we need not be detained by the question of whether section 335 of the Gambling Act 2005, which allows the enforcement of gambling contracts, has affected section 4 of the Marine Insurance Act 1906, which provides that “every contract of marine insurance by way of gaming or wagering is void”.7 Nor need we be unduly concerned with the Marine Insurance (Gambling Policies) Act 1909,8 which imposes criminal penalties upon persons who effect contracts by way of gambling on marine perils. The starting point in the enquiry is to consider whether there is an insurable interest not whether the contract is one of gaming or wagering.9 In this context the Marine Insurance Act 1906 section 6 provides as follows:

“The assured must be interested in the subject-matter insured at the time of the loss though he need not be interested when the insurance is effected …”

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