In the case of insurance, the insurable interest is one of the essential elements, and without it, no insurance will be valid. Insurable interest means the pecuniary relationship that exists between the policyholder and the subject matters. That means only the person who has an insurable interest in the subject matter of insurance can ensure that particular subject matter. It is the legal, financial interest of a man on a property, the interest being such that by the safety of the subject matter, he is benefited by the loss, damage or destruction thereof, he is prejudiced.
In the case of marine insurance, insurable interest must exist at the time of claim, although it does not need to exist at the time of the insurance contract.
In the case of life insurance, insurable interest must exist at the time of the insurance contract, and it does not need to exist at the time of claim.
In the case of fire and accident insurance (short and long term disablement insurance contract), insurable interest must exist at the time of the insurance contract and also at the time of claim.
It should be remembered that in the absence of insurable interest, the contract shall be void. Therefore, it is the duty of the underwriters to see the position of insurable interest at the time of insurance of the policy, and similarly, it is the duty of the Claim Manager to see the position of insurable interest at the time of setting a claim.
In case of that situation, when Jenny was the agent of her principal and received 15% of her principal’s earnings as her commission, she had an insurable interest in her principal’s voice because she will face a financial loss if her principal loses her voice and can not perform any more due to illness and that’s why Jenny can insure on her principle voice. But if she is not her agent, she has no insurable interest. In that situation, before losing her voice permanently due to an infection, the artist of the principal discontinued the agent-client relationship with Jenny. As a result, from the time of termination of the contract, Jenny had no insurable interest in the artist’s voice. The artist lost her voice permanently due to an infection after the termination of agent-client relations or agent-principle contract. That’s why at the time when Jenny filed claims with the insurance company, there was no insurable interest of Jenny on the subject matter. Since it was an accident insurance contract and also lone term disablement insurance contract and in case of it, the insurable interest must exist at the time of insurance contract and claim, and since at the time of claim, Jenny had no insurable interest in the artist’s voice, Jenny will not get the claim that means the claim will not be covered by the insurance company.