Insurable Interest

Insurable Interest – Insurable interest refers to the legal right of a person or entity to insure something because they would suffer a financial loss or detriment if the insured item, event, or person were damaged, lost, or deceased. It ensures that insurance is based on genuine risk rather than speculation or profit. This principle is fundamental to insurance contracts — without insurable interest, the contract is void. The insured must have such interest at the time of policy inception and, in certain cases (like property insurance), at the time of loss as well. Example: A person has an insurable interest in their own home (potential loss due to fire) or a company may have insurable interest in a key employee whose death would financially impact the business