Col. C. Castro v. Insurance Commissioner - Insurable Interest

GR. 55836, Feb. 16, 1981

Facts:

>  Castro applied for insurance on the life of his driver.  On the basis of such application, Insular Life issued policy No. 934943 effective July 18, 1979.

>  The policy applied for and issued was on a 20-yr endowment plan for the sum of P25T with double indemnity in case of accidental death.

>  Castro paid the first quarterly premium of P309.95.  About 3 months later, on Oct. 16, 1959, the insured driver was allegedly shot to death by unknown persons. (hmmm… sounds fishy…)

>  Castro then filed a claim for the total benefits of 50T under the policy.

>  Insular life denied the claim on the ground that the policy was VOID.  Insular instead refunded to Castro the premiums he had paid.

Issue:

Whether or not Castro has an insurable interest in his driver.

Held:

NO.

The requirement of insurable interest to support a contract of insurance is based upon consideration of public policy which renders wager policies INVALID.  To sustain a contract of this character it must appear that there is a real concern in the life of the party whose death would be the cause of substantial loss to those who are named as a beneficiary.

Mere relationship of uncle and nephew, employer and employee is NOT sufficient to provide an insurable interest on the life of the insured.  It must be shown that the destruction of the life of the insured would cause pecuniary loss to the complainant.  This, Castro failed to prove.