All risks are not insurable. Otherwise, an insurance contract would be no different from a wagering contract or betting. It was explained earlier that speculative risks are not insurable. A wagering con tract is speculative in nature and is illegal in terms of Section 30 of the Indian Contract Act. A subject matter of a valid contract has to be legal. What distinguishes as insurance contract from a wagering contract and makes it non-speculative, is that the insured must have an insurable interest in the subject of insurance.
In simple terms, it means that the proposer must have a stake in the continuance of the subject matter insured and could suffer a loss, if the risk occurs. What is insured is the financial or pecuniary interest in the subject matter of insurance. The insured must be in a relationship with the subject matter of insurance, whereby he benefits from its safety and well being and would be prejudiced by its loss or damage.
Insurable Interest
All risks are not insurable. Otherwise, an insurance contract would be no different from a wagering contract or betting. It was explained earlier that speculative risks are not insurable. A wagering con tract is speculative in nature and is illegal in terms of Section 30 of the Indian Contract Act. A subject matter of a valid contract has to be legal. What distinguishes as insurance contract from a wagering contract and makes it non-speculative, is that the insured must have an insurable interest in the subject of insurance.
In simple terms, it means that the proposer must have a stake in the continuance of the subject matter insured and could suffer a loss, if the risk occurs. What is insured is the financial or pecuniary interest in the subject matter of insurance. The insured must be in a relationship with the subject matter of insurance, whereby he benefits from its safety and well being and would be prejudiced by its loss or damage.