Statutory creation and modification of insurable interest
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Statutes creating insurable interest
In addition to the ways in which insurable interest arises, shown above, it has also been created by statute in certain situations.
(a) Settled Land Act 1925. This Act gave insurable interest to tenants of property falling within the scope of the act.
(b) Married Women's Property Act 1882. This Act provided married women with an insurable interest in their own lives. It also entitled a woman to effect a policy on the life of her husband for her own benefit.
(c) Repair of Benefice Buildings Measure 1972. Diocesan Boards of Finance of the Church of England were obliged by this measure to insure any property for which they were responsible.
(d) Industrial Assurance and Friendly Society Act 1948. As we saw under "Life insurance" above, this act creates a limited form of insurable interest.
Statutes modifying insurable interest
We have seen already how certain people such as bailees, repairers, and so on may acquire insurable interest on the property of others held by them for which they are responsible. Over the years the liability of certain of these people was considered to be too onerous and statutes were passed to modify their liability. When the responsibility was modified it followed that the insurable interest was correspondingly reduced and it is for this reason that we are interested in these modifying statutes at this stage. One practical point worth bearing in mind is that while the statutes modified liability in certain instances, in others they left a full liability with the person who was originally liable. As a result the practical position relating to insurable interest may be unaltered.
(a) Carriers Act 1830. A common carrier is exempted from liability for certain valuable article of greater value than £10 each, except where the value of the item has been declared and any extra charge paid.
(b) Carriage of Goods by Sea Act 1971. Liability of the carrier in this case is limited to 10,000 gold francs per package or unit, or 30 gold francs per kilo gross weight of the goods lost or damaged, whichever is the greater.
(c) Hotel Proprietors Act 1956. Where people have booked sleeping accommodation at an hotel and provided the hotelier displays a copy of the Schedule to the Act in a prominent position, his liability for loss of or damage to the property of guests is limited to £50 anyone articles directory and £ I 00 anyone guest. These limits do not apply where the loss or damage was brought about by the negligence of the proprietor or his staff, or in the case of goods deposited or offered for safe keeping.
(d) Trustee Act 1925. Trustees can effect fire insurance on trust property up to three-quarters of the value, paying the premium out of trust income. This Act does not alter the fact that in his own right the trustee can insure the property for its full value.
Assignment
We have noted already that it is the interest of a person in the subject matter of insurance that is insured by a policy. Any assignment or transfer of that policy from one person to another will cause problems as the new holder of the policy may not have the same insurable interest. Assignment of a policy, often referred to as transfer of rights, can be carried out but in the case of personal contracts the prior consent of the insurer is required.
The term personal contracts refers to the fact that the insurance company were influenced by the confidence they had in the insured and his ability to care for the subject matter of insurance. Fire and accident Policies are considered personal contracts while life and marine policies are not.
The law relating to assignment is too complex for the scope of this book; we will therefore consider the assignment of personal contracts, life policies and marine policies.
Assignment of personal contracts. In general, assignment will be valid only with the consent of the insurers, as they will want to satisfy themselves as to the qualities of the new insured. The consent to assignment of the policy really constitutes a fresh contract and for this reason is often termed novation.
Assignment of life policies. Life policies are freely assignable as they are looked upon as being reversionary interests in view of the fact that the enjoyments of the rights in the policy are deferred. Three points arise in connection with assignment of life policies:
(a) it must be for consideration,
(b) the assignee need not have insurable interest in the life assured,
and
(c) notice of the assignment should be given to the assure.
The last point, although not compulsory, is advisable as it will give the assignee the right to sue in his own name under the policy according to the Policies of Assurance Act 1867.
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