Determination of the existence of the insurance contract.

Kind of loss covered by the insurance policy

The cause of the loss or injury must be a risk covered by the insurance policy in order that the insurer may step into the shoes of the insured or the legal right of subrogation.

When the insurer effects payment to the insured for a loss or injury which is not a risk stipulated in the policy, the former is effecting a voluntary payment and he has no legal claim against the third party or the wrongdoer who caused the loss but nevertheless, the latter may be held liable for the torts caused against the insured’s property under existing laws.

Determination of the existence of the insurance contract.

The character of insurance is to be determined by the nature of the contract actually entered into or issued (Federal V. Ins. Co. vs. Flomester, 130 S.W. 574.) whatever the form it takes or the name it bears. Thus, it was held that an agreement entered into by a corporation, even though it was called a surety company, to indemnify for a valuable consideration another against loss by reason of uncollectible debts, was a contract of insurance and not a contract of guaranty. (Tebbets vs. Guarantee Co., 73 F. 95.)

Interest in something that is insured.

Insurable interest is a demonstrable interest in something covered by an insurance policy, the loss of which would cause deprivation or financial loss.

Insurable interest must be shown whenever somebody takes out an insurance policy or makes a claim.