Law and economics question?

Question

Why can you not take out an insurance policy on a stranger's life? On a related note, how does this concept relate specifically to the case of Da Costa v Jones where a man wagered on the gender of the Chevalier d'Eon but the contract was held invalid.

Answer 1

At common law in England, it was considered opporbrious to bet on the life of a stranger. The insurance exchanges at the time were often conducted under bridges and other places.

Much of the issues surrounding insurance on lives of strangers revolved around an interest one stranger would have in another, other than to make a bet.

The other problem was the temptation to cheat. Its much easier to kill a stranger and collect on the policy, or at least make that person have an "accident" and collect.

So the law devised different methods to require that the insured consent to a policy being taken on his life and a person named as his beneficiary.

With respect to Da Costa v. Jones I believe the case went to jury and the case was decided in favor of the plaintiff.

One of the presiding judges (Mansfield) commented that if it were up to him, the contract would not be enforceable but at the time, gentlemens' wagers were enforceable at law as a contract.

The Cevalier d'Eon was determined to be male, but lived his life as a cross-dressing soldier, bureaucrat, courtier, and recluse.

Answer 2

On your first question, you do not have an insurable interest in the stranger.

Answer 3

depends who writes the policy...I got insurance on my pit bull with aids !!! wuff !