Principle of insurable interest in insurance contract

Abstract

The principle of insurable interest can be considered as one of the substantive elements of insurance contract which is applied in Thailand and other foreign countries. Regarding Thai law, this principle had been enacted in the civil and commercial code particularly in article 863 “A contract of insurance is not binding on the parties unless the assured has an interest in the event insured against”. It can be mentioned that there is no further explanation regarding such principle. This leads to having some concern. Therefore, this article aims at analyzing the history, definition and main idea of the principle of insurable interest in order to create understanding between parties and to establish the fairness which seems to the be the ultimate goal of the law.