What is an Insurable Interest?
Following up on our last question about insurance policies, we talked about having an insurable interest in order to purchase insurance. In this post, we will expand on what is an insurable interest.
You are said to have insurable interest in a property when you will suffer a financial loss as a result of the property being damaged or destroyed and benefit financially from its continued existence. For example, if you own a car, if is damaged in a car accident, you will be out the amount you paid for your car and will have to arrange for another replacement vehicle as well as mode of transportation before you purchase a new car (i.e. car rental, bus, tax, etc).
The idea of insurable interest came from 18th century England where fraudsters would take out insurance policies on houses they did not own and subsequently set fire to them in order to collect from the insurance claim.
