Insurable Interest 可保權益

Definition 定義

Insurable interest is the legal right to insure that arises from a relationship, recognised at law, between the insured and the subject matter of insurance. Because of that relationship the insured benefits when the subject matter is safe and suffers financial loss if it is damaged, destroyed or gives rise to a liability.

Note the difference between the subject matter of insurance (for example, a building) and the subject matter of the contract (the insured's financial interest in that building). The policy actually protects the latter.

Importance of Insurable Interest 可保權益的重要性

Insurable interest separates insurance from gambling: a person with no interest who buys cover is simply betting on someone else's loss.

It also reduces moral hazard, discouraging anyone from deliberately causing loss to property or a life they have no stake in. And it sets the ceiling for indemnity: the insured can recover no more than the value of their interest.

Its Essential Criteria 必要條件

Three conditions must all be met: (1) there must be property, a right, an interest, a life, a limb or a potential liability capable of being insured; (2) it must be the subject matter of the insurance; and (3) the insured must stand in a relationship to it that the law recognises, benefiting from its safety and prejudiced by its loss.

How It Arises 如何產生

Ownership: an owner or part-owner has an insurable interest in their property.

Contract: for example, a mortgagee (the lending bank) in the mortgaged property, a tenant whose lease makes them responsible for repairs, or a bailee holding goods for someone else.

Statute: where the law makes an employer liable to compensate employees for work injuries, the employer has an insurable interest in that potential liability.

Life insurance: everyone has an unlimited insurable interest in their own life and in the life of their spouse. A creditor's interest in a debtor's life is limited to the amount of the debt, and an employer's interest in a key employee's life is limited to the financial loss it could suffer. In addition, section 64A of the Insurance Ordinance (Cap. 41) provides that a parent or legal guardian of a minor (a person under 18) has an insurable interest in the minor's life.

When Is It Needed? 何時需要

Property and liability insurance: insurable interest is normally required both at inception and at the time of loss, and interest at the time of loss is what a claim depends on.

Marine insurance: interest is needed only at the time of loss, because cargo often changes hands while in transit.

Life insurance: interest is needed only at inception. The policy stays valid even if the relationship later changes, for example after a divorce.

Assignment 轉讓

A property insurance policy is a personal contract: the insurer has accepted a particular insured. When the property is sold the policy does not pass to the buyer automatically, and it can be assigned only with the insurer's prior consent.

Life policies can be assigned freely, for example to a bank as security for a loan, and the assignee does not need an insurable interest in the life insured. Marine cargo policies are generally freely assignable as well.