Insurable Interest Essay

Decent Essays
What is ‘Insurable Interest in a Maritime Insurance Policy’
The term “insurable interest” refers to the benefit (or interest) a person has in an insured object (or person – as in a life insurance insurable interest). This benefit can refer to a financial benefit, among others. A person has insurable interest in a thing when he or she would experience some kind of loss (financial or otherwise) if the thing were to be damaged or lost.
Say that you have piece of jewelry in your home that is also a family heirloom. If someone were to steal it (or if you were to drop it down the sink, or in the toilet, or even lose it in the garbage) you would suffer different kinds of loss, both financial and emotional. Thus, you have an insurable interest
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There is no requirement of insurable interest when the contract is made. This section also allows the subject matter of a marine policy to be insured ‘lost or not lost’. This means that it is possible for the insured to recover under a marine policy even if he acquired his interest after the loss has occurred, unless he was aware of the loss and the insurer was not. These rules reflect the practices of marine trade where cargo frequently changes ownership in the course of transit. In this case there is a transfer of rights i.e assignment of interest.
Assignment of Interest may be done by endorsement in blank that is to sign the policy. Alternatively, this can be also done by signing in favor of one other person. In turn, only that person can then claim to be the rightful owner. The law permits this unless the policy states otherwise. However, hull policies prohibit assignment even though the marine act promotes this transfer of rights.
An interesting fact is that companies can have insurable interest in their workers, both in higher ups and in those lower down the ladder. There has been some controversy about this recently, where companies took life insurance policies out on their employees without their employees’ consent. In these instances, the companies collected the policies on their deceased employees, who sometimes did not even work for them anymore.
Of course companies have
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