Insurable Interest

Insurable Interest

Definition:

Insurable interest is the relationship between a person and another or between a person and a property whereby the former will derive pecuniary benefit or advantage on the latter's continued existence or preservation and will suffer pecuniary loss or damage upon the latter's death or destruction by the happening of the event insured against.

A person has insurable interest in the life and health of himself, of his spouse and of his children, of any person whom he depends wholly or in part for education or support, or in whom he has a pecuniary interest.

Insurable interest in the subject of the insurance must exist for all types of insurance as a basic requisite. For life insurance, it must exist at the time the policy is purchased and need not exist at the time of the occurrence of the loss. However, in property and casualty insurance, it needs to exist both at the time of the policy and at the time of the occurrence of the loss.