Professional Documents
Culture Documents
John Wright took 4 policies for 3,000 pounds, on the life of the Duke of Cambridge in "A"
insurance Co. (Subsidiary of G). Later he took reinsurance for 1,000 pounds, with the
principal company G. The 4 policies issued by A were surrendered : Policy of G continued.
However : Claim arose, and G contended that there was no "insurable interest" at the time
the claim arose as policies had been surrendered & hence it was not liable. The House of
Lords rejected this & held, "life insurance is not a contract of indemnity" and it is enough if
the insurable interest exists at the time of the contract of insurance, though not at the time of
the loss." Insurable interest is one of the fundamentals of the contract of insurance, without
it, the contract is void. This distinguishes it from a contract of wager (sn. 30 Contract Act).
Everyone has Insurable interest in one's own life. Wife has insurable interest in the life of
husband and vice versa and this is presumed by law.
The widow and children of the deceased insured who had nominated his policy in favour of
his mother demanded the LIC as a legal heirs of the assured to pay their shares of the sum
assured to them. But the LIC insisted that payment would be made only to the nominee
unless they are stopped by a stay order from the court. The legal heirs thereupon filed this
suit which ordered the LIC to pay their shares to them in spite of the nomination following
the Supreme Court decision in Sabita Devi s case and ordered the LIC to pay the plaintiffs
cost as the LICS stand was not justifiable
The assured insured his life with the company and in the letters of the contract it was
provided that the policy was to become unenforceable if the assured would cause his own
death before the policy has been in existence for one year. The assured after one year
assigned the policy in favour of his son and 10 months thereafter he committed suicide out
of disgust. It was shown that he did it out of disgust but while in possession of his senses. In
a suit by his son, the assignee, it was held by the Lahore High Court, that the committing of
suicide is not a crime in India and that the rule in English law laid down in Beresfords case
has no application in our country and the insurers were therefore liable. The condition in the
policy is that if the assured has committed suicide within one year, then alone the company
would not be liable, but in this case the suicide was committed long after the excepted
period, the insurers were held liable.
Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd
The ventilators of a ship were closed to prevent the entry of sea water and rain coming in
during heavy weather and this closing of the ventilators damaged the rice due to excessive
heat. It was held that the incursion of the sea water through the ventilators would have been
within the definition of the perils of the sea and that the damage, being in fact caused by an
action taken necessarily and reasonably to prevent the perils of the sea affecting the goods,
was itself a loss due to perils of the sea. Lord Wright observed that when there is an
accidental incursion of sea water which is not expected in the ordinary course of things and
if there is a consequential damage it is a loss by the perils of the sea.