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Chapterisation

Hypothesis
Insurable interest is the one of the necessary condition important to create a legally binding
valid insurance contract and without insurable interest the insurance contract will be void and
will be seen as a contract of wager which is void as under Section 30 of Indian Contract Act
1872.
Research Question
Can there be any valid insurance agreement without insurable interest?
Research Methodology
This project is basically non empirical or doctrinal research based. Sources are mainly books,
magazine, journals and web based.

Introduction and definition


The aim of insurance is to shift risk from one person (the insured) to another (the insurers).
As we all know that insurance contracts are subject to the general law of contract, but special
rules also apply to them which do not apply to most other contracts for instance both parties
are under the duty of disclosure in relation to some policies (utmost good faith, insurable
interest etc).

Need of Insurable interest in Insurance Contract


For the contract of insurance to be valid it is not only necessary that the parties to the contract
are competent to contract, it is made with free consent and the consideration is lawful, beside
all this it is also necessary that the insured has insurable interest on the subject matter of the
insurance. if there will be no insurable interest then contract will amount to wager. Insurable
interest in broad term means that the party to the insurance contract who is insured or
policyholder must have a particular relationship with subject matter of the insurance, whether
that be a life or property. The concept of insurable interest is of particular importance in
marine and life insurance.
Wager and Insurance

In a contract of wager all the parties does not have any interest in happening of the event
other than the sum or stake him will win or lose. This is what marks the difference between a
wagering agreement and a contract of insurance because every contract of insurance requires
for its validity the insurable interest.
Types of insurable interest
There are basically two types of insurable interest (1) Contractual (2) Statutory
Insurable Interest in Life Insurance
As we all know life insurance contract is not a contract of indemnity and a person affecting a
policy must have an insurable interest in the life to be assured .In the life insurance policy
persons having relationship by marriage (example, husband and wife), blood (example, father
and son) or adoption (example, adopted son and his mother), have been recognized as having
insurable interest.