Insurance

Insurance is an undertaking to make up a loss in exchange for a premium against an uncertain peril.

Insurable Interest
Insurable interest is what separates an insurance product from a bet, the policy holder must beat risk of losing something. Insurance transfers this risk from the policy holder to the insurer. This is a long standing principle of Scottish Law of unclear origin, but was is included in the Life Assurance Act 1774 as a restatement.

The owner doesn't have to "own" it, just have some sort of pecuinary interest.

Without Insurable Interest, the insurance contract is void and the recovery is limited to indemnity.

In life insurance policies, the interest must be present when the contract is concluded. Ties of natural affection such as yourself and Spouse/Civil Partner provide insurable interest (but not generally children) or a financial interest such as an obligation, business partner or agent.

For Indemnity insurance, the interest must exist at the time of the loss only (Marine Insurance Act 1906). The policy holder must own the property, or some sort of contractual right to the property.

Close attention needs to be paid to this in the event of businesses. In Reef Insurance Group one of the partners in a partnership took out an insurance policy in his name only, as the property was owned by the partnership no insurable interest was found.

For Tennancies, the interest is limited to the lease value.

Utmost good faith and disclosure of facts
As the insurer is at an information disadvantage to the insured, the insured has an extra duty to to provide information to the insurer.

At formation, this must be full disclosure of all material circumstances (Marine Insurance Act 1906). This varies from a regular contract where the duty in a regular contract where the duty is simply not to misrepresent (this varies in consumer insurance contracts).

The insured must not mislead the insurer.

The insured is not required to disclose unknown facts that cannot be reasonably found out; instead proposed policyholders are asked to the best of your knowledge and belief.

After formation, there isn't an ongoing duty to disclose, but the the requirement of good faith does continue to a lesser extent, and includes the duty not to make a fraudulent claim.

Renewals are a new contract, so the duty to disclose applies again here.

Types of Insurance
Generally the goal of an Insurance product is to make good the loss suffered by the policy holder.

Indemnity
Indemnity insurance puts the insured back to where they were before the peril occurred It is common in marine, Fire, Home, and Car insurances.

Non Indemnity (Assurance)
Non Indemnity insurance pay a pre-defined benefit. They are often used in cases like life insurance where indemnity is not possible or not feasible to determine.

Losses
Insurances, depending on the peril, can pay either the first party's (policholder's) loss and losses incurred by 3rd parties (public liability losses).

Insurance Agents
The general rule is the agent acts for the insured, however this is a rebuttable presumption. Its certainly the case for Lloyds of London agens.

An agent may be acting for the insurer where they're acting as their representative (s39 2000 Act), when its collecting information with the authority (from the insurer) to collect it as the insurers agent, when it contracts with express authority and is usng its insurer's license to do so.

If it is material to the risk, the principal must be shown.