What is an Insurable Interest?
A person has an insurable interest in something when loss or damage to that property would cause that person to suffer a financial loss. For example, if the house you own is damaged or destroyed by fire, the value of your house has been reduced, and whether you pay to have the house repaired or rebuilt, or sell it at a reduced prince, you have suffered a financial loss as a result of the fire. On the other hand, if your neighbor’s house, which you do not own, is damaged by fire, you may feel sorry for your neighbor, but you have not suffered a financial loss from the fire. You do not have an insurable interest in your neighbor’s house.
