Insurable interest

Produced in partnership with Dr Franziska Arnold-Dwyer of University College London
Practice notes

Insurable interest

Produced in partnership with Dr Franziska Arnold-Dwyer of University College London

Practice notes
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This Practice Note considers insurable interest, including insurable interest in construction and liability insurance. It also considers insurable interest in subrogation, co-insurance and double insurance and the Insurable Interest Bill.

What is insurable interest?

‘Insurable interest’ refers to a doctrine of insurance contract law that requires the insured to have a relationship with the insured subject-matter that is recognised by law. Broadly speaking, only persons who have some relation to the subject-matter of the insurance contract, by reason of which they would be prejudiced by its loss, or may incur liability in respect thereof, can insure that subject-matter. Conversely, a person who has no such relationship does not have any insurable interest and therefore cannot take out insurance on that subject-matter. The burden rests on the insured to prove an insurable interest exists.

The historic rationales for requiring an insurable interest are that:

  1. •

    it is characteristic of an insurable interest that distinguishes an insurance contract from wagering contracts (the ‘anti-wagering rationale’)

  2. •

    an insurable interest is thought to reduce the moral hazard posed by the insured taking

Franziska Arnold-Dwyer
Dr Franziska Arnold-Dwyer

Associate Professor of Law at University College London, University College London


Dr Franziska Arnold-Dwyer is an Associate Professor of Law at University College London. Prior to that, she was a Reader in Insurance Law and Sustainability and the Director of the Insurance, Shipping and Aviation Law Institute at Queen Mary University of London. Before returning to academia, Franziska practised law in the Litigation & Dispute Resolution Department at Clifford Chance LLP and in the Litigation & Regulatory Group at DLA Piper UK LLP. She is the author of ‘'Insurance, Climate Change and the Law’ (Routledge, 2024), ‘Insurable Interest and the Law’ (Routledge, 2020) which won the BILA Book Prize 2021, and the executive editor of 'The Law of Reinsurance and England and Bermuda’ (6th ed., Sweet & Maxwell, 2024). She has published papers in leading law and insurance journals. Franziska is the deputy editor of the British Insurance Law Association Journal, regularly speaks at insurance industry events and academic conferences. She assisted the Law Commission and the Scottish Law Commission with their insurable interest reform project, and has given evidence on insurance regulation in Parliament. 

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Jurisdiction(s):
United Kingdom
Key definition:
Liability insurance definition
What does Liability insurance mean?

Commercial insurance covering the risks against a third-party claim, or in case of employer liability insurance, claims by employees.

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