Question

1. Define “Insurable Interest”, identify why there is a requirement for “Insurable Interest” in an insurance policy, and describe what an “Insurable Interest” is in Property & Casualty insurance and Life Insurance, and highlight the differences between the two.

Answer 1

Insurable interest is the desire of the party to take the insurance and is willing to pay the premium to insure the object or life. An the need for insurable interest is of utmost importance in an insurance policy since quite a few people do not have any interest in the policy and their application is rejected.

Insurable insurance in property and casualty insurance is the property itself and it must exist when the property is purchased and also when there is a loss. An life insurance includes insurable interest on the life of the policy holder and can include his family. The major difference between the two is that property insurance is more related with covering the loss of the house property and life insurance is on the life of a person.