Insurable Interest and utmost good faith

Insurable interest

• Enables one to insure one’s own property.
• Where the insured should directly suffer financial loss if the risk occurs.
• One cannot insure the property of another.
• Because on has no insurable interest.
• If one insures the property of another one might be tempted to deliberately cause the risk to occur in order to make a profit from the loss e.g. insuring a neighbour’s house.

Utmost good faith

• Uberrima Fide.
• The insured must reveal truthfully any relevant details concerning the insured item in the proposal form or claim form.
• The insurer must reveal all details or conditions about the contract to be insured:
• in the policy document.
• Failure to disclose the relevant details makes the contract of insurance void.
• Allows risks to be accurately and properly assessed.
• And fair premiums to be fixed.

To access more topics go to the Commerce Notes page.