Экономические науки / 14.Экономическая теория.

Фролова А.О.

Ассистент кафедры иностранных языков

Анисимова Светлана Анатольевна

Донецкий национальный университет экономики и торговли имени

Михаила Туган - Барановского, Украина

What is an "insurable interest"?

This paper aims to determine the insurable interest, to bring the examples of insurable interest in human life and to consider the history of insurable interest, as well as insurance and the principle of insurable interest.

Insurable interest exists when an insured person derives a financial or other kind of benefit from the continuous existence of the insured object. A person has an insurable interest in something when loss-of or damage-to that thing would cause the person to suffer a financial loss or other kind of loss. For example, if the house you own is damaged by fire, the value of your house has been reduced, and whether you pay to have the house rebuilt or sell it at a reduced price, you have suffered a financial loss resulting from the fire. By contrast, if your neighbor's house, which you do not own, is damaged by fire, you may feel sympathy for your neighbor and you may be emotionally upset, but you have not suffered a financial loss from the fire. You have an insurable interest in your own house, but in this example you do not have an insurable interest in your neighbor's house. A person has an "insurable interest" in something when loss or damage to it would cause that person to suffer a financial loss or certain other kinds of losses. For purposes of life insurance, everyone is considered to have an insurable interest in their own lives as well as the lives of their spouses and dependents. For property and casualty insurance, the insurable interest must exist both at the time the insurance is purchased and at the time a loss occurs. For life insurance, the insurable interest only needs to exist at the time the policy is purchased.

The basic principle of insurance is to protect against loss rather than create an opportunity for speculative gain. Insurable interest is no longer strictly an element of life insurance contracts under modern law. Exceptions include vitiation agreements and charitable donations. The principle of insurable interest on life insurance is that a person or organization can obtain an insurance policy on the life of another person if the person or organization obtaining the insurance values the life of the insured more than the amount of the policy. In this way, insurance can compensate for loss. A company may have an insurable interest in a President/CEO or other employee with special knowledge and skills. A creditor has an insurable interest in the life of a debtor, up to the amount of the loan. A person who is financially dependent on a second person has an insurable interest in the life of that second person. Legal guidelines have been established in many jurisdictions which establish the kinds of family relationships for which an insurable interest exists. The insurable interest of family members is assumed to be emotional as well as financial. The law allows insurable interest on the presumption that a personal connection makes the family member more valuable alive than dead. Thus, husbands/wives have an insurable interest in their spouse, and children have an insurable interest in their parents (and vice-versa). Brothers/sisters and grandchildren/grandparents are also assumed to have an insurable interest in the lives of those relatives. But cousins, nieces/nephews, aunts/uncles, stepchildren/stepparents and in-laws cannot buy insurance on the lives of others related by these connections.

What does insurable interest mean on a life insurance policy? If you want to buy a life insurance policy on someone else's life, you must have an interest in that person remaining alive, or expect emotional or financial loss from that person's death. This is called an insurable interest. Without this requirement, it would be very easy to make a living by purchasing life insurance policies on elderly strangers, and then collecting the proceeds when they died. The insurable interest requirement also prevents people from buying a life insurance policy on someone and then causing or hastening that person's death. When you buy insurance on your own life, you are assumed to have an insurable interest. If you are buying a policy on someone else's life, an insurable interest can typically be established if you have a sufficiently strong relationship with that person based on blood, marriage, or monetary interest. To put it bluntly, they have to be worth more to you alive than dead. Husband-wife relationships and parent-child relationships are almost always sufficient to create an insurable interest. In addition, grandparent-grandchild relationships and sibling relationships are frequently considered sufficient for establishing an insurable interest. The ties between cousins, aunts/uncles and nieces/nephews, and other more distant relatives don't automatically give rise to insurable interests because their emotional and financial bonds may be less strong. Certain relationships founded on monetary interests can also create insurable interests. For example, a creditor is considered to have an insurable interest in a debtor's life. Even though death doesn't extinguish the debtor's obligation to repay a loan, the creditor faces potential harm if the debtor's estate cannot repay the loan. Other examples include the relationship between a business and a key employee, or the relationships among partners in a partnership or stockholders in a closely held corporation. The death of a CEO, general partner, or active stockholder can cause financial disruption to the business and harm the other business owners. The insurable interest must exist at the time you enter into the life insurance contract, not at the time of the loss or harm. In other words, you must have an insurable interest at the time you take out the policy. However, the insurable interest generally doesn't have to remain at the time of that person's death.

Conclusion: the article suggests that the insurable interest is a legitimate property interest that is present in the insured in respect of a particular object of insurance and is the immediate basis for determining the subject matter of the insurance contract. Insurable interest must meet the following requirements: be a subjective property, lawful in its content and rely on the legally significant reason.