TITLE XII. INSURANCE. CHAPTER I. General principles of insurance. II. Marine insurance. III. Fire insurance. IV. Life and health insurance. CHAPTER I. GENERAL PRINCIPLES OF INSURANCE.1 1 In this chapter are inserted some rules which have been ARTICLE I. Nature of the contract. II. Parties. III. Insurable interest. IV. Concealment and representation. V. The policy. VI. Warranties. VII. Premiums. VIII. Perils and their causes. IX. Notice of loss. X. Double insurance. XI. Re-insurance. XII. Various kinds of insurance. ARTICLE I. NATURE OF THE CONTRACT. SECTION 1085. Insurance a contract of indemnity. 1086. Meaning of terms used. 1087. Agreement to insure. 1088. Modifications of the contract. § 1085. Insurance is a contract whereby one party, for a consideration, undertakes to in emnify the other against Insurance a indemnity. contract of Meaning of terms used. Agreement to insure. Modifications of the contract. loss, damage or liability, arising from an unknown or contingent event.' 1 It may be doubted whether this definition is true as respects life insurance. In England, it is held that it is not a contract of indemnity. (Dalby v. India Life AssuSo., 15 C. B., 365.) But a late decision in this state (Ruse v. Mut. Benefit Ins. Co., 23 N. Y., 516,) seems to involve a conclusion sustaining the text. 1086. The person indemnified is called the insured. The events contemplated as the source of danger are called the perils or risks. The person who undertakes to indemnify, is called the insurer.' The sum agreed upon in consideration of the undertaking to indemnify, is called the premium. The instrument in which the agreement is set forth, is called the policy. 1 1 As underwriting is not in use in this country, we have used the term insurer in all cases, instead of underwriter. § 1087. The acceptance of an application for insurance by the insurer constitutes a valid agreement to insure, except where the insurer is one required by law to contract in another form exclusively. § 1088. The provisions of this title in reference to concealment and representations, apply as well in case of a modification of the contract as to its original formation. Who may insure. ARTICLE II. PARTIES TO THE CONTRACT. SECTION 1089. Who may insure. 1090. Who may be insured. 1091, 1092. Assignment to mortgagee. 1093. Agent may treat contract as his own. 1089. Any one who is capable of making a contract may be an insurer. But this section does not affect the restrictions imposed by special statutes upon foreign corporations, non-residents and others. be insured. § 1090. Any one who has an insurable interest, except- Who may ing only an alien enemy, may be insured. § 1091. Where the owner of property mortgaged effects insurance in his own name, providing that the loss, if any, is payable to the mortgagee, or assigns a policy of insurance to the mortgagee with the assent of the insurer, the insurance is deemed to be upon the interest of the mortgagor. The mortgagee does not cease to be a party to the original contract, and any act of his which would otherwise render the policy void will have the same effect, although the property is in the hands of the mortgagee. Grosvenor v. Atlantic Fire Ins. Co., 17 N. Y., 391; Buf falo Steam Engine Works v. Sun Mutual Ins. Co., id., Assignof thing ment to mortgagee insured. § 1092. If the insurer, at the time of his assent to the Id. transfer of the policy, imposes further obligations on the assignee, making a new contract with him, the acts of the mortgagor cannot affect his rights. Ibid. § 1093. When one procures an insurance for another without the authority of the latter, the latter may ratify it, but at any time before such ratification, the former may treat the contract as if it were his own. Stilwell v. Staples, 19 N. Y., 134. ARTICLE III. INSURABLE INTEREST. SECTION 1094. Insurable interest defined. 1095. Interest in things. 1096. Expectancies. 1097. Measure of interest. 1098. Insurance without interest, illegal. 1099. When interest must exist. interest 1094. Every interest, in a thing movable or immova- Insurable ble, or in the obligation of a person, or any relation to, or defined. liability in respect of, the same, such that a contemplated peril might directly damnify the insured, is an insurable interest. Interest in things. Mere expectancies. Measure of interest in property. Insurance without 1095. An insurable interest in a thing may consist in: 1. An existing right of property; 2. An inchoate right founded on such existing right; 3. An expectancy coupled with such an existing right in that out of which the expectancy arises. 1096. A mere contingent or expected interest in any thing, not founded on any actual right or property in the thing, nor upon any valid contract for it, is not an insurable interest. Stockdale v. Dunlop, 6 M. & W., 224; Devaux v. Steele, 6 Bing. N. C., 358; Lucena v. Crawford, 3 B. & P., 94. § 1097. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss or injury thereof. § 1098. The sole object of insurance is the indemnity of interest the insured, and if he has no insurable interest the contract illegal. When inte- is void. 1 R. S.. 662, §§ 8-10; 1 Duer Ins., 94; Ruse v. Mut. Ben. Ins. Co., 23 N. Y., 516. § 1099. The interest insured must exist at the time of the loss, but need not exist before. 2 Taunt., 237; 8 Miss., 515; 4 id., 336, 337; 3 Sumn., 142. Perhaps this ought to be qualified by excepting life insurance from the cases in which interest at the time of loss is necessary. (Compare Dalby v. India Life Ins. Co., 15 Com. B., 365; with Ruse v. Mut. Ben. Ins. Co., 23 N. Y., 516.) ARTICLE IV. CONCEALMENT AND REPRESENTATIONS. SECTION 1100. What must be disclosed. 1101. Test of materiality. 1102. Nature of interest. 1103. Representations. 1104. Effect of concealment or misrepresentation. 1105. Fraudulent warranty. 1106. Matters of opinion. be disclosed § 1100. Each party must communicate to the other, What must frankly, in good faith, all material facts within his knowledge, which the other has not the means of ascertaining. Though a fuller disclosure is required in marine insurance materiality. § 1101. Materiality is to be determined not by the event, Test of but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract or in making his inquiries. 2 Duer Ins., 382-403. insured. § 1102. The nature or amount of the interest of the in- Interest of surer need not be communicated unless in answer to inquiry, except in cases mentioned in section Tyler v. Ætna Fire Ins. Co., 12 Wend., 507; 16 id., 385; tions. § 1103. Representations may be oral or written. They Representamay be made at the same time as the policy or before it. § 1104. The falsity of a representation of that which is material, or the concealment of that which ought to have been communicated, avoids the policy. § 1105. An intentional and fraudulent omission to communicate matters that prove or tend to prove the falsity of a warranty, avoids the policy. 2 Duer Ins., 435, 573. Effect of ment or misrepre sentation. conceal Fraudulent warranty. |