Insurable Interest

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Insurable Interest A financial interest that a person has in something such as a particular property or another individual, which means that the person would suffer a loss should that property or individual be harmed or in the happening of some event. Therefore to have an insurable interest in something means you own it, or would suffer financially if it were damaged or destroyed or if an eventuality occurs. Insurable interest is most common in immediate family and business relationships for example; -Yourself -Spouse -Children (adopted or natural) -Grandparents and grandchildren -Siblings -Corporations and business partnership An example of insurable interest is a policyholder buying property insurance for their own house but not for their neighbour's house. The person does not have an insurable interest in any financial loss arising from damage to their neighbour's house. Similarly having financial hardship if the insured person were to pass away. For example, Joe and Jessica married and have two children. Both Bob and Sally work, but Sally only works part-time, so she can also take care of the children. They are both eligible to insurable interest. Insurable interest prevent from being gambling and abusive. It prevents a person from taking a life insurance policy on an acquaintance or stranger, as there is no financial impact from the insured’s death. If that were not the case, buying life insurance would be more like gambling and encourage fraud. An example that does not demonstrate insurable interes: your neighbor wants to buy life insurance policy on you so that when you die he/she will be indemnify. Unless there is more to the story and your neighbor can prove your death would cause them financial hardship, they do not have an insurable interest and will not be able to buy a policy on your life, with or without your consent. There are at least four features you have to prove you have insurable interest in an insurance policy. 1- There must be some property, right, interest, life, limb or potential liability capable of being insured. 2- The insured must have an economic or financial interest in the subject matter of insurance. 3- The insured must have a current interest in the subject matter, not merely an expectancy of having an interest. 4- The relationship between the insured and the subject matter of insurance must be recognized at law. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful

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