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Halsbury's Laws of England/Insurance (Volume 60 (2018))/1. Introduction/(1) Origin and Common

Principles/4. Exceptions to the principle of indemnity.

4.     Exceptions to the principle of indemnity.

Brexit note

Contracts of life insurance, personal accident and sickness insurance and some forms of contingency insur-
ance are not strictly contracts of indemnity1. In contracts of this class there is normally no necessity to prove
a pecuniary loss2. If the insured chooses, for example, to value a leg or an arm at £50,000 or £500,000, and
to pay premiums accordingly, he is entitled to recover the stipulated sum in the event of his losing the mem-
ber in question. His estimate of his possible loss is, in effect, regarded as genuine and acceptable, even if
not agreed, because no one is likely deliberately to inflict such damage on himself, and no one can, in fact,
foresee, even at the date of loss of the member, what the full pecuniary loss is likely to be. Similarly, a pro-
poser can value his life at any figure that he can afford, particularly as he is unlikely to be able to foresee, at
the date when he takes out the policy, what at the date of his death his financial obligations to his depen-
dants may be. Indeed, it has been said that such an insurance is really a form of investment 3. The same
principle is equally applicable whether the life insured is that of the insured himself, or of some other person
in whose life he has an insurable interest4; the sum insured becomes payable in all cases merely by reason
of the happening of the event. Similarly, in some forms of contingency insurance the contract is merely to pay
a fixed sum or a sum arrived at by a stipulated calculation if the contingency matures 5.
1      See Dalby v India and London Life Assurance Co (1854) 15 CB 365, Ex Ch (life assurance); Theobald v Railway Passen-
gers Assurance Co (1854) 10 Exch 45 at 53 per Alderson B (personal accident and sickness insurance). A policy insuring a
third person against personal accident is, however, a contract of indemnity: Blascheck v Bussell (1916) 33 TLR 51 (affd 33
TLR 74, CA); Hebdon v West (1863) 3 B & S 579. As to contracts of indemnity see PARAS 2–3. As to contingency insurance
see PARA 717 et seq.

2      Dalby v India and London Life Assurance Co (1854) 15 CB 365, Ex Ch; Law v London Indisputable Life Policy Co (1855) 1
K & J 223; Gould v Curtis [1913] 3 KB 84 at 95, CA, per Buckley LJ.

3      Gould v Curtis [1912] 1 KB 635 at 640 per Hamilton J; affd [1913] 3 KB 84, CA.

4      See PARAS 463–472.

5      See PARA 718.