There are essentially two broad types of gaming or wagering contracts. The first relates to contracts where the assured has no insurable interest or expectation of acquiring such an interest, and the second to policies which declare that the policy itself is proof of interest, commonly referred to as ‘honour’ or ‘ppi’ policies.
No insurable interest or expectation of acquiring such an interest
The very essence of a contract of marine insurance is that of indemnity. This necessarily means that an assured who has no insurable interest in the subject-matter insured, would not be able to show that he has suffered a loss. Such a contract, where the assured has not an insurable interest is deemed to be a gaming or wagering contract.
There are two parts under this concept: the first refers to the case where the assured has not an insurable interest, and the second to ‘where the contract is entered into with no expectation of acquiring such an interest’. The corollary of the latter is that if the assured has a genuine expectation of acquiring an interest, then the policy is not a wager policy.
‘Honour’ or ppi policy
A contract of marine insurance is deemed to be a gaming or wagering contract: Where the policy is made “interest or no interest” or “without further proof of interest than the policy itself,” or “without benefit of salvage to the insurer”, or subject to any other like term: Provided that, where there is no possibility of salvage, a policy may be effected without benefit of salvage to the insurer.
It is to be noted that such a policy does not automatically rule out the possibility of the assured having, in fact, an insurable interest. The fact that the wording of the policy dispenses with proof of interest does not necessarily mean that the assured does not or cannot have an interest in the subject-matter insured.
Without benefit of salvage
A policy ‘without benefit of salvage’ is a gaming or wagering policy and, therefore, void. But if the nature of the subject-matter insured is such that there is no possibility of salvage (eg, commission, unsecured loan or anticipated profit to be earned from the sale of cargo on its arrival at the port of destination), the policy, though ‘without benefit of salvage’, is valid.
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