Insurable interest in the law of marine insurance

AuthorMeixian Song
PositionLL.M.; PhD researcher at University of Southampton Law School
SSLR Insurable interest in the law of marine insurance Vol 1(2)
Insurable Interest in the Law of Marine Insurance
Meixian Song1
nsurable interest is a fundamental concept in insurance law. Until recently,
it was not subject to doubt that the assured must obtain insurable interest
when claiming a loss under indemnity insurance by virtue of statutes in
English law. In the light of the Gambling Act 20052 and its repeal of s 18 of the
Gaming Act 1845, indemnity insurance which includes most forms of property
and liability insurance other than marine will not be rendered unenforceable
due to the lack of an insurable interest. In contrast, marine insurance retains
its own rules. Remaining unaffected by Gambling Act 2005, pursuant to s 4(2)
of the Marine Insurance Act 1906, which is now the only piece of legislation
requiring insurable interest among all forms of insurance. Where the assured
neither has insurable interest nor the expectation of acquiring such interest,
the insurance contract is void. Moreover, it constitutes a criminal offence by
virtue of the Marine Insurance (Gambling Policies) Act 1909 if the assured is
not in good faith.
Accordingly, the Law Commissions have published Issues Paper No.4 in 2008
addressing whether the law on insurable interest should be repealed. The
Issues Paper is part of a programme to reform UK insurance law.3 In respect
of marine insurance, Issues Paper No. 4, recognises that the position remains
subject to argument, but notes that an interest must be demonstrated at the
time of loss. In principle, a gambling contract is not enforceable in insurance
cases in spite of the accidental effect of the Gambling Act 2005.4 Nevertheless,
the enactment has triggered concern and a review of whether insurable
interest is now redundant in marine and other insurance.
This article is attempting to address the legal nature of insurable interest
based upon discussing the concept of insurable interest and its links to wager
and the principle of indemnity. Moreover, the queries specific to marine
insurance in the Issues Paper will be discussed from the perspectives of
retrospective attachment and assignment. It will finally look at the
fundamental issue concerning the balance of interest between assured and
insurer in this respect. Both legal nature and consequential effects have to be
taken into consideration in order to propose a suggestion that insurable
1 LL.M.; PhD researcher at University of Southampton Law School
2 Section 335 Enforceability of gambling contracts
(1) The fact that a contract relates to gambling shall not prevent its enforcement.
(2) Subsection (1) is without prejudice to any rule of law preventing the enforcement of a contract on
the grounds of unlawfulness (other than a rule relating specifically to gambling).
3 On the internet:
[Accessed June 14, 2011].
4 Chris Nicoll, Insurable interest: as intended?, Journal of Business Law, 2008.

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