What is the definition of Insurable Interest?

Insurable Interest refers to the person's ability to prove that there is indeed a possibility of loss and that the person has a justifiable interest in preventing that loss from happening or in preserving the property or life being insured. There is only the possibility of loss and not gain from the insured event ever happening.

A person should be able to suffer a genuine economic loss in case the insured event happens. For instance, a family will suffer an economic loss if the father (who is the breadwinner) will die. The loss of income of the father is something that the father has an insurable interest - he would like to prevent his family from suffering from the economic impact of his untimely death.

If any person applying for insurance cannot demonstrate insurable interest, the insurance company will not issue the policy.

• Insolvency
• Misstatement of Age or Sex Provision
• Modified Premium Policies
• Moral Hazard
• Comprehensive Coverage