Necessity of Insurable Interest in Insurance Contracts

Abstract

The need for an insurance cover is growing today owing to the occurrence and risk of enhanced perils, which were previously unknown to life, trade and commerce. Insurance is meant to safeguard man from unforeseen events, which might be of some detriment to him. It provides him with an assurance to save him from any loss which might be brought about by the happening of any unforeseen event either to his life or property. Insurance is a contract by which one party in consideration of a price (called the premium) paid to him, adequate to the risk, becomes security to the other that he shall not suffer loss, damage or prejudice by the happening of the perils specified to certain things which may be exposed to them.2 There must be either some uncertainty whether the event will happen or not, or if the event is one which must happen at some time or another, there must be uncertainty as to the time at which it will happen.3 This article provides an insight into the concept of insurable interest by describing the nature of insurable interest and also explains the necessity of an insurable interest in regard to Life Insurance, Fire Insurance and Marine Insurance and also the various persons who have an insurable interest in these contracts.