A company effected an insurance policy over a ship, premised on the fact that it was the sole shareholder of the owner and that in terms of an ancillary agreement it was to be vested with its ownership and therefore had the right of use of the ship in respect of which it held a fishing permit.
The question was whether the plaintiff had an insurable interest. After conducting an intensive investigation into the history of the term "insurable interest", reviewing very thoroughly the laws of England and Holland, old South African law (laws of the Provinces of South Africa prior to unification) and our current law, a court decided that the plaintiff did have an insurable interest as a result of its shareholding, its expectation to become owner and its use of the vessel.
A party cannot effect an insurance policy over an asset in which it has no insurable interest.
What is an insurable interest depends on the facts of the matter.
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