insurable interest


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Insurable interest

An insurance term referring to the relationship between a policy's insured person or property and the potential beneficiary. The beneficiary must have an insurable interest in the insured person or property to receive payment of the policy if the insured died while the policy was in force.

Insurable Interest

The ability to derive profit or another benefit from an object, business or something else. For example, dentists have an insurable interest in their dental equipment because without it they would be unable to make a living. As the name implies, one may purchase an insurance policy to provide coverage for the loss of an insurable interest.

insurable interest

A right or interest in property or in the life of another that would cause the person to suffer a monetary loss if injury came to the property or to the other person. One must have an insurable interest in order to buy insurance, because the insurance is intended to compensate one for a loss.

References in periodicals archive ?
The insured's owned the property when the damage occurred, so they had insurable interest at the time, and they gave prompt notice as is required by the policy.
The trial court granted summary disposition in favor of Prime One with respect to Petro Mart's claim because it determined that Petro Mart did not possess an insurable interest in the gas pumps.
This strategy might also make moot the insurable interest question in cases where the kids are also looking to fill a gap in their own retirement income planning, he adds.
In addition to insurable interest violations, many of these policies were thought to contain false statements, particularly with respect to the insureds' net worth, which was overstated in order to qualify them for larger face amounts of insurance.
Most states have statutes that require that a person purchasing an insurance policy have an insurable interest in the life of the person whose life is insured.
To establish an insurable interest under property insurance following 3 pre-requisites are to be followed.
At a minimum, the 2009 amendment fails to address the following: (1) the "real" holder of an insurable interest remains confusing, (2) the time when an insurable interest must exist, (3) the period in which the insured owes the duty of disclosure to the insurer, (4) potential obstacles in implementing the incontestability provision, (5) possible unfairness associated with the rule regarding the construction and governance of contractual terms, and (6) the moral hazard issue embedded in rules relating to double insurance.
The false applications showing insurable interest, moreover, were not presented to the government; they were presented to North Central.
An insurable interest exists when the beneficiary has a reasonable expectation that he will benefit--by love, affection, or finances--from the continued life and health of the person who is insured.
However, if the law in the state of the donor's domicile does not recognize that a charity has an insurable interest in the life of the donor, complications may arise.
See "If A Stranger Calls," IA May 2008) When a person buys a policy, it's usually because she wants to protect an insurable interest--say, her husband's insurable interest in her, or her children's, or that of a business partner.
This Note shows that SPIN-Life insurance policies contradict the nature and purpose of life insurance and should be considered securities or wagers, not insurance contracts; make human lives a commodity; violate current insurable interest laws and public policy against wager contracts; and should be declared void ab initio.