Insurance Law - Insurance vs Wagering

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.