ABSTRACT

The law of insurable interest is set out in general terms in s 5 of the Marine Insurance Act 1906. The main requirement of insurable interest is, it would appear, to stamp out wagering contracts. It is also linked to the fact that a contract of marine insurance is a contract of indemnity; thus, an assured must first show that he has suffered a loss before he can put in a valid claim under the policy. A person can only suffer a loss if he has an interest in the subject matter insured; if he has no interest in the subject matter insured, he suffers no loss, and the contract of insurance is effectively a gamble or a wager, and, therefore, void under s 4 of the Act.