Taking security over insurance policies


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Banking & Finance expert
Practice notes

Taking security over insurance policies


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Banking & Finance expert

Practice notes
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Rights under insurance policies are a type of contractual right.

Lenders can take security over insurance policies by an assignment by way of security. There are also additional protections that a lender can utilise in relation to insurances, such as having its interest noted on a policy of insurance or being co-insured. These additional protections take different forms and have different benefits for a lender.

This Practice Note will focus on issues relevant to taking security over rights under insurance policies. For information on how to take security over contractual rights in general, see Practice Note: Taking security over contractual rights.

Nature of insurance policies

Rights under insurance policies are not tangible assets. They are a type of contractual right. A contractual right is what is known as a chose in action or thing in action, ie something that is recoverable by legal action as opposed to something that is physically possessed.

Contracts of insurance are a special kind of contract. They are contracts of the utmost good faith, which means that the insured party is

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United Kingdom
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Key definition:
security definition
What does security mean?

money deposited to ensure that the defendant attends court;

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