631.07 Insurable interest and consent.

(1) Insurable interest. No insurer may knowingly issue a policy to a person without an insurable interest in the subject of the insurance.

(2) Consent in life and disability insurance. Except under sub. (3), no insurer may knowingly issue an individual life or disability insurance policy to a person other than the one whose life or health is at risk unless the latter has given written consent to the issuance of the policy. Consent may be expressed by knowingly signing the application for the insurance with knowledge of the nature of the document, or in any other reasonable way.

(3) Cases where consent is unnecessary or may be given by another.

(a) Consent unnecessary. A life or disability insurance policy may be taken out without consent in any of the following cases:

1. A person may obtain insurance on a dependent who does not have legal capacity.

2. A creditor may at the expense of the creditor obtain life or disability insurance on the debtor in an amount reasonably related to the amount of the debt.

3. A person may obtain a life or disability insurance policy on members of the person's family living with or dependent on the person.

3m. A person may obtain a disability insurance policy on a child placed for adoption, as defined in s. 632.896 (1) (c), with the person.

4. A person may obtain a disability insurance policy on others that would merely indemnify against expenses the policyholder would be legally or morally obligated to pay.

(am) Insurance for persons in international public service. The commissioner may promulgate rules permitting issuance of insurance for a limited term on the life or health of a person serving outside the continental United States in the public service of the United States, provided the policyholder is closely related by blood, marriage or adoption to the person whose life or health is insured.

(b) Consent given by another. Consent may be given by another in the following cases:

1. A parent, a guardian of the person, or a person having legal custody as defined in s. 48.02 (12) may consent to the issuance of a policy on a dependent child.

2. A grandparent may consent to the issuance of life or disability insurance on a grandchild.

3. A court of general jurisdiction may give consent on ex parte application on the showing of any facts the court considers sufficient to justify such insurance.

(4) Effect of lack of insurable interest or consent. No insurance policy is invalid merely because the policyholder lacks insurable interest or because consent has not been given, but a court with appropriate jurisdiction may order the proceeds to be paid to someone other than the person to whom the policy is designated to be payable, who is equitably entitled thereto, or may create a constructive trust in the proceeds or a part thereof, subject to terms and conditions of the policy other than those relating to insurable interest or consent.

History: 1975 c. 373, 375, 422; 1977 c. 354 s. 101; 1989 a. 336; 1999 a. 85; 1999 a. 162 s. 23; 2001 a. 38.

The proceeds of a casualty insurance policy purchased by a land contract vendee that named the vendor as mortgagee were properly awarded to the vendor under sub. (4) when, following confirmation of a strict foreclosure judgment against the vendee, the insured premises were destroyed by fire. Disrud v. Arnold, 167 Wis. 2d 177, 482 N.W.2d 114 (Ct. App. 1992).

A contract of insurance upon a life in which the insured has no interest is a pure wager. Nevertheless, sub. (4) makes clear that the beneficiary of the policy is entitled to the policy proceeds. Section 895.055, with immaterial exceptions, voids all gambling contracts, but s. 600.12 (2), provides that if a section in chs. 600 to 655 conflicts with another statutory provision, the section in chs. 600 to 655 governs. Sun Life Assurance Co. of Canada v. U.S. Bank National Association, 839 F.3d 654 (2016).

While Article IV, section 24, of the Wisconsin Constitution states that “except as provided in this section, the legislature may not authorize gambling in any form," the legislature has not authorized gambling in sub. (4). Gambling contracts, including life insurance policies that lack an insurable interest, are still forbidden. The statute changed only the remedy for violation, from invalidation of the policy to requiring the insurer to cough up the proceeds rather than being allowed to keep all the premiums and pay nothing to the policy holder because the latter had no insurable interest in the policy. Sun Life Assurance Co. of Canada v. U.S. Bank National Association, 839 F.3d 654 (2016).

A stockholder may have an insurable interest in corporate property. Heyden v. Safeco Title Insurance Co. 175 Wis. 2d 508, 498 N.W.2d 905 (Ct. App. 1993).