INSURABLE INTEREST. Such an inter est in a subject of insurance as will entitle the person possessing it to obtain insurance.
It is essential to the contract of insurance, as distinguished from a wager, that the as sured should have a legally recognizable in terest in the insured subject, the pecuniary value of which may be appreciated and computed or valued. An earlier examination of the subject, as connected with life insur ance, results in the conclusion from the au thorities, that at common law that contract was not one of indemnity, and wagering policies were not unlawful, and therefore that logically, in such policies, an insurable interest should not be required, but that the American courts adopted what has been termed a rule of American common law that all wagers were void on grounds of public policy and, therefore, that there must be an insurable interest ; 35 Am. L. Reg. N. S. 65. This rule, it was said, obtains in all the states except New Jersey and Rhode Island ; Trenton Mut. Life & Fire Ins. Co. v. John son, 24 N. J. L. 576; Mowry v. Home Life Ins. Co., 9 R. I. 354; and see Clark v. Allen, 11 R. I. 439, 23 Am. Rep. 496.
Absence of an insurable interest is always a defense for the insurer even though there is an incontestible clause; Bromleys' Adm'r v. Ins. Co., 122 Ky. 402, 92 S. W. 17, 5 L. R. A. (N. S.) 747, 121 Am. St. Rep. 467, 12 Ann. Cas. 685.
The case of Godsall v. Boldero, 9 East 72, was so generally cited and relied on in the . American cases that it is not easy to estimate the influence of that case before it was overruled by Dalby V. I. & L. L. As surance Company, 15 C. B. 365. It is of special interest to note that the New Jersey ease in which the court ,expressly refused to follow Godsall v. Boldero, was decided about the time of the ease which overruled it, but before it was reported in the United States. See also 2 Sm. L. Cas., 9th Am. ed. 1530, where both the English cases mention ed are reported, and the authorities in both countries are collected, the conclusion of the American editors being, that as to fire, ma rine, and life insurance there must be some interest in the insurer. See also Biddle, Ins.
§ 184, where it is said that wagering policies were not void in England at common law. See WAGER.
Where the subject-matter is property, as in fire and marine insurance, the question whether there is an insurable interest is generally free from difficulty and the rule established by the decisions is comparatively simple. It is not requisite that the insured party should have an absolute property in the insured subject, or that the subject or interest should be one that can be exclu sively possessed or be transferable by de livery or assignment. Insurable interest in volves neither legal nor equitable title; Car ter v. Ins. Co., 12 Ia. 287; Pedrick v. Fisher, 1 Sprague 565, Fed. Cas. No. 10,900. The subject or interest must, however, be such that it may be destroyed, lost, damaged, diminished, or intercepted by the risks in sured against. The interests usually insured are those of the owner in any species of property, of mortgagor, mortgagee, holder of bottomry or respondentia bmd, of an agent, consignee, lessee, factor, carrier, bailee, or party having a lien or entitled to a rent or income, or being liable to a loss depending upon certain conditions or con tingencies, or having the certainty or prob ability of a profit or pecuniary benefit de pending on the insured subject ; 1 Phill. Ins. c. 3; 11 E. L. & Eq. 2; 48 id. 292; Cobb v. Ins. Co., 6 Gray' (Mass.) 192; Allen v. Ins. Co., 2 Md. 111; Rohrbach v. Ins. Co., 62 N. Y. 47, 20 Am. Rep. 451; Home Protection of North Ala. v. Caldwell Bros., 85 Ala. 607, 5 South. 338; California Ins. Co. v. Compress Co., 133 U. S. 387, 10 Sup. Ct. 365, 33 L. Ed. 730. Property subject to a deed of trust is encumbered under a provision against a chat tel mortgage, and the insured has not un conditional and sole ownership ; Hunt v. Fire Ins. Co., 196 U. S. 47, 25 Sup. Ct. 179, 49 L. Ed. 381. See Clymer Opera Co. v. Fire Ins. Co., 238 Pa. 137, 85 Atl. 1111.