THE contract of insurance is defined as a contract by which the insurers agree to indemnify the person assured from any loss which he may sustain by reason of the perils insured against. Such is the uniform construction which courts of law put upon this contract without exception or qualification, whether the insurance relates to fire or marine perils. It has been said that the contract is not merely a contract of indemnity only, but a personal contract to indemnify the person originally insured: “it is not a contract to indemnify any one whatever, who may become interested in the subject insured during the continuance of the risks.” In the course of mercantile transactions, it is very common for policies of insurance to be assigned; and the question immediately occurs: if the contract is a personal contract, if in its nature the insurers only agree to indemnify the person originally insured in case he suffers loss in the subject insured, how is it that the contract may be assigned, that is, how can the assignee acquire the right to be indemnified for loss which he may suffer from the perils insured against? To attempt to answer this question is the subject of this article.
It is obvious that the contract of insurance may be assigned in one of two ways. In the first place, the policy may be assigned without the assignment of the property insured; or, secondly, the policy may be assigned together with the assignment of the property insured. The distinction is important, and must be kept in mind.
Where the assignment is of the policy only, there is no difficulty in reconciling this with the nature of a personal contract. All that is assigned in this case is the right to receive the insurance money, in case the interest of the person originally insured suffers loss from the perils insured against. The assignment is like the assign-
- The remarks in this article are to be applied only to marine and fire insurance, not to life insurance.
- Arnould, Marine Ins. (6th ed.), p. 112; Lynch v. Dalsell, 3 Bro. P.C. 497 (1729); Sadlers Co. v. Badcock, 2 Atk. 554 (1743).