Insurable interest
You can only insure goods you stand to lose something by.
Definition
Section 5 of the Marine Insurance Act 1906: a person has an insurable interest where they stand in a legal or equitable relation to the adventure or to any insurable property at risk, such that they may benefit by its safety or be prejudiced by its loss. Marine insurance is unusual in that the interest need not exist when the cover is taken out — section 6 allows it to attach later, which is what makes "lost or not lost" cover and open policies workable.
Why it decides money
It decides who may claim. Under CIF the buyer bears the risk from loading and therefore has the interest, even though the seller bought the policy — which is why a certificate is made assignable.
Related terms
- Assignment and blank endorsement
- How the right to claim travels with the goods.
- Certificate of insurance
- Evidence that a named shipment is covered under a policy.
- Marine Insurance Act 1906
- The English statute that still frames most cargo policies worldwide.
More in law and duties
InsuranceScanner is an insurance intermediary, not an insurer — see the Terms for our role. Nothing here is a personal recommendation that a particular cover, sum insured or deductible is suitable for you. Where anything on this page conflicts with the certificate, policy schedule or wording issued by an insurer, that document governs.