Wagering v insurance

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Insurance Law - Insurance vs Wagering

Insurance Law - Insurance vs Wagering

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  • 1. Insurance contract Wagering contract 1 holder of an insurance policy must have an insurable interest. - An insurable interest exists whenever a particular event causes a person damage. those who have an insurable interest can recover on the policy and then only to extent to which that insurable interest is damaged or lost Case: Macaura The parties have no insurable interest in a wagering agreement -no insurable interest is needed 2 contract of insurance, both parties are interested in the subject-matter. - When an insured has the required financial interest he or she will suffer dam occurrence of the event and will therefore be entitled to compel the insurer to its obligation to pay a sum of money. In wagering agreement, neither party has any interest in happening or non-happening of an event 3 Contracts of insurance are contracts of indemnity except life insurance contract, which is a contingent contract -In indemnity insurance the insured must at least have a financial interest in non- occurrence of the risk. a wagering agreement is a conditional contract. -no question of indemnify on the happening of the event. Fixed amount becomes payable. 4 Contract of insurance are based on scientific and actuarial calculation of risks wagering agreements are a gamble without any scientific calculation of risk. 5 Contracts of insurance are regarded as beneficial to the public and hence encouraged by the State - Is a contract to make good the loss of property(or life) of another person against some consideration called premium. - Case: Rorner v Haslam wagering agreements serve no useful purpose. 6 A contract of insurance is a valid contract wagering agreement is void being expressly declared by law. - A wagering contract is unenforceable in court 7 A contract of Insurance, ie,life, accident, fire, marine, etc. is not a wager though it is performable upon an uncertain event. - It is so because therein the parties have an interest in the contract. A person has an insurable interest in his own life and he can make a valid contract to insure for the benefit of a third person. But an insurance on the life of a person in which the insurer has no interest whatever is void as being a wager. -Thus, a person effecting insurance on his younger brother’s life has no insurable interest and the contract is void.