Insurable Interest

Question 1

The concept of Insurable Interest was first recognized in the case of ________ in what year?

Answer 1

Castellian v/s Priston in 1883

Question 2

Explain insurable interest?

Answer 2

It is a legal concept that requires an insured person to have financial interest in the subject matter of insurance I.e the person would stand to suffer a financial loss if the insured property gets damaged or destroyed

Question 3

Who won the legal case that led to the establishment of insurable interest?

Answer 3

Castellian

Question 4

The legal case that led to the establishment of insurable interest was between?

Answer 4

The landlord and tenant

Question 5

What are the ways with with insurable interest is created?

Answer 5

a) by ownership
b)by law
c)by statue
d) by personal relationship
e) by contract

Question 6

What are the three purposes of the insurable interest requirement?

Answer 6

1. To prevent gambling
2. To reduce moral hazard
3. To measure the amount of loss in property insurance

Question 7

Others asides the owners that have insurable interest

Answer 7

Trustees (legally responsible for someone else’s property), Bailees (legally responsible for the goods of another person), husband and wife, creditors, agents, Mortgager and mortgagee

Question 8

How does a creditor have insurable interest?

Answer 8

He has insurable interest in the life of the debtor I.e if the debtor dies, he will suffer a financial loss

Question 9

In Life Insurance, insurable interest must exist when?

Answer 9

At the time of inception I.e at the time of issue

Question 10

In Marine insurance, insurable interest must exist when?

Answer 10

At the time of claim

Question 11

In property insurance, insurance interest must exist when?

Answer 11

At the time of inception and time of claim

Question 12

Time of inception means?

Answer 12

The time the policy is issued

Question 13

Insurable interest of an employer in the life of an employee cannot be easily measured, but can be measured based on ?
and in the case where it’s a key employee?
and in the case where it’s a partner?

Answer 13

salary of the employee
Contribution level of that employee
Limited to the equity contribution of the partner

Question 14

To assign a policy means

Answer 14

To transfer the ownership from one person to another

Question 15

Assignment of a policy can take place without the consent of the insurer. True or false?

Answer 15

False

Question 16

What is assignment of policy?

Answer 16

It refers to the process where an original insurance contract is terminated and replaced with a new contract that reflects a change in ownership and control

Question 17

Novation occurs when there is a merger and acquisition involving the insured party. True or false?

Answer 17

True

Question 18

What insurance policy does not involve the consent of the insurer in assignment?

Answer 18

Marine Cargo Policy

Question 19

The only excellent as to when a child has insurable insurable interest in his parents is when____?

Answer 19

When the parents are supporting the child

Question 20

Stated in Isimoya’s text book, what case emphasizes the insurance concept Insurable Interest

Answer 20

Dalby V India and London life insurance Co

Question 21

The Dalby V India and London life insurance co Case was between

Answer 21

The Duke of Cambridge and plaintiff

Question 22

If the loss payment cannot exceed the amount of one’s insurable interest, what insurance principle is supported? and explain

Answer 22

Indemnity as the aim of insurance is to provide protection against financial lose and overcompensation of the loss would violate the principle

Question 23

Is the beneficiary required to have an insurable interest, either at the inception of the policy or time of death, when you purchase life insurance on your own life?

Answer 23

No

Question 24

The creditors insurable interest is limited to what?

Answer 24

The loan given to the debtor

Question 25

What distinct feature differentiates the insurable interest on liability insurance from the insurable interest in life and property insurance

Answer 25

The extent of insurable interest. In liability insurance, it cannot be determined. In life and property insurance, it can be determined by the degree of financial loss that would be incurred in the case of damage or loss

Question 26

in the case of motor Insurance where a driver found guilty of an offence which is involved in an accident does not receive the claim for damage to his own car and also liability incurred due to damage to another’s property but he shall be insured for the amount of penalty that was imposed for his offense. True or false?

Answer 26

False

Question 27

What is underwriting?

Answer 27

Process of evaluating analyzing the risk involved in insuring a person, property or event and determining the right premium to charge

Question 28

What is the condition for assigning an insurance policy?

Answer 28

Underwriting condition

Question 29

When are marine cargo insurance policies assigned?

Answer 29

When goods are in transit, as the goods being insured are often in transit for a long period and can be subject to variety of risks such as theft, damage etc

Question 30

What is novation?

Answer 30

The process where the insurer gives consent on the assignment of a policy

Question 31

Can you take insurance policy of Red Fort situated at Delhi?

Answer 31

No, as I have no insurable interest in it I.e if it gets damaged, I will not suffer a financial loss