In this April 2023 judgment the UK Court of Appeal found that an insured may have an insurable interest in cargos of grain in circumstances where they do not form an identified part of the bulk grain stored or shipped.
In a dispute that dealt with a claim under a Marine Cargo Open Policy, the court found that the buyer had an insurable interest in the cargoes both by virtue of payment or part payment and by virtue of having an immediate right to possession of them as a matter of the governing law,
The court’s judgment approved the principle established by the Supreme Judicial Court of Maine in Cumberland Bone Company v Andes Insurance Co 64 Me 46 6 (1874) and cited the following passage in the current edition of MacGillivray on Insurance Law, and cited since the first edition of MacGillivray without adverse judicial comment:
“If neither property nor risk has passed, payment or part-payment of the price will give the buyer an insurable interest, because if the goods were lost or damaged and the settler was insolvent the buyer might not be able to recover the money which he paid for them.”
The court said that the insurer’s argument sought to impose on the relationship between insured and insurer an additional requirement beyond anything in the authorities concerning insurable interest, that the goods in respect of which the insured would otherwise have an insurable interest should be ascertained in the same sense as required for determining whether or not a buyer has a proprietary interest in goods for the purposes of the relevant governing Sale of Goods Act.
The court said that confused the concept of an insurable interest as between insured and insurer with that of a proprietary interest as between buyer and seller in circumstances where the authorities on insurable interest established, as the insurers accepted, that an insured can have an insurable interest in goods even though it has no proprietary interest.
The additional requirement which the insurer sought to impose was, the court said, not only contrary to principle but retrogressive. It went against the direction of travel of the authorities on insurable interest for some 140 years onwards.
The court said that a finding of insurable interest is not in any sense dependent upon the goods being ascertained or part of a sufficiently identified bulk and that on the authorities there was no case which suggests that there cannot be an insurable interest unless the goods in question are sufficiently identified.
The broad approach to finding an insurable interest is also the approach adopted by South African courts.