Hebdon claimed under a policy with ILA in the sum of pounds 2500 on the life of X. Hebdon was employed in a bank of which X was the senior and managing partner. In 1855 Hebdon was employed on a seven-year contract at pounds 600 a year. He also owed the bank pounds 4700 on loans. X had assured Hebdon that during X’s life Hebdon would not be called upon to repay the loan. Hebdon, with X’s permission, in 1856, insured X’s life with another company (CGLI) for pounds 5000 so as to provide against the loan. 12 months later, the debt having increased to pounds 6000, Hebdon took out the policy with ILA which was the subject of the proceedings. X died in 1861. CGLI paid pounds 5000 which Hebdon paid to the bank. ILA contended that Hebdon had no interest in X’s life within the meaning of the 1774 Act or that his interest was less than the pounds 2500 so that he should recover less pursuant to section 3.
Held: There was no insurable interest at all in X’s assurance that the loan would not be called because there was no consideration for the assurance and it was not therefore a binding agreement such as could be ‘considered as a pecuniary or indeed any appreciable interest in the life of X’. There was an insurable interest in Hebdon’s salary (for 5 more years at pounds 600 a year) at the time the policy was effected, and so in a sum in excess of the value of the ILA policy, but nonetheless that because the value of that interest had been paid by CGLI Hebdon could recover nothing by virtue of section 3 of the Act. The ‘question’ which arose was whether the payment of pounds 5000 by CGLI ‘is a bar to the plaintiff’s claim by virtue of [Section 3] it being taken as a fact that the pounds 5000 included all the insurable interest that the plaintiff had at the time of making both policies; in fact that the interest of the plaintiff at the time of making the insurance with the defendant was the same as that which he had when he made the insurance with [CGLI] . . . It was said that . . the object of the statute would be defeated, as a small amount of insurable interest might be made the foundation for a great number of insurances, each to the amount of the whole interest of the insured . . .’ The court referred to the use of the words ‘insurer or insurers’ in section 3 as an indication that recovery could only be made once (rejecting, to my mind, a compelling submission that the use of the plural contemplated several insurers on one policy) ‘Looking to the declared object of the legislature, we are of the opinion that though, upon a life policy, the insurable interest at the time of the making the policy, and not the interest at the time of death, is to be considered, it was intended by the 3rd section of the Act that the insured should in no case recover or receive from the insurers (whether upon one policy or many) more than the insurable interest which the person making the insurance had at the time he insured the life. If for greater security he thinks fit to insure with many persons and by different contracts of insurance, and to pay the premiums upon each policy, he is at liberty to do so, but he can only recover or receive upon the whole the amount of his insurable interest, and if he has received the whole amount from one insurer he is precluded by the terms of the 3rd section of the statute from recovering or receiving any more from the others. Any argument arising from the supposed hardship of allowing the insurers in such a case to receive and retain the premiums without being obliged to pay the consideration for which such premiums were paid, would be equally applicable to the case of marine assurances, upon which, however many policies there may be, the underwriters are only liable to the extent of the value insured.’
Wightman J
(1863) 3 B and S 579, [1863] EngR 272
Comonlii
Insurance Act 1774 3
England and Wales
Cited by:
Distinguished – Feasey v Sun Life Assurance Company of Canada and Another: Steamship Mutual Underwriting Association (Bermuda) Ltd v Feasey ComC 17-May-2002
The fact that there was more than one insurance policy in place for the same interest would not preclude a claim under one of them. A mutual underwriting group insured members against personal injury and so forth through ‘lineslip’ policies. The . .
Lists of cited by and citing cases may be incomplete.
Insurance
Updated: 23 January 2022; Ref: scu.180086
