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Insurance - noting an interest |
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Noting the interest of a third party (eg a T or mortgagee) means that the insurance
company will then have to notify that person of any claim under the policy (or an
event likely to invalidate the policy – for instance, non-payment of the premium).
‘Noting’ does not create joint insurance. Strictly speaking, it does not entitle the
person ‘noted’ to make a claim, but in practice insurers will usually not pay out
on a policy without the consent of a person whose interest is noted.
All of this was confirmed in a Privy Council case ( Colonial Mutual [1995] ) where
it was confirmed that a person whose interest is ‘noted’ would be treated as
having an interest in the proceeds of sale as if there had been an assignment.
Needless to say, ‘noting’ is not necessary if the policy has an ‘all interests’
clause (or a ‘general interests’ clause), which means that the interests of all
such people (eg mortgagees and Ts) are treated as being noted. When a claim
arises, the insurer will then ask the insured for details of all mortgagees or Ts
having an interest in the property at the time. See Understanding Property
Insurance by Gerald Sherriff (Law Society; £59.95), an excellent guide to a
topic that many conveyancers should know more about.© Practical Lawyer
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November 2008 |
