Insurable Interest

Insurable interest is one wherein economic loss would be suffered from an adverse occurrence to the person(s) insured.

A person can only collect in property casualty if the insured has an insurable interest at the time of the loss. Many times a person can buy a valid contract but there is no insurable interest yet. Example is before buying a home you have to show up with a contract or a binder proving that the house is insured to receive the mortgage. Therefore you can actually insure property where there is not insurable interest but anticipated to be one. You can only collect at the time of loss IF an insurable interest exists at that time.

In life insruance you only need an insurable interest at the time you take out the policy. No continuing insurable interest is then needed. Contoversial areas include Corporate owned life insurance and investor owned life insurance and viatical settlements.