insurable interest

Also found in: Dictionary, Thesaurus, Medical, Financial, Encyclopedia, Wikipedia.

Insurable Interest

A right, benefit, or advantage arising out of property that is of such nature that it may properly be indemnified.

In the law of insurance, the insured must have an interest in the subject matter of his or her policy, or such policy will be void and unenforceable since it will be regarded as a form of gambling. An individual ordinarily has an insurable interest when he or she will obtain some type of financial benefit from the preservation of the subject matter, or will sustain pecuniary loss from its destruction or impairment when the risk insured against occurs.

In certain jurisdictions, the innocent purchaser of a stolen car, who has a right of possession superior to all with the exception of the true owner, has an insurable interest in the automobile. This is not the case, however, where an individual knowingly purchases a stolen automobile.

Insurable interest is not dependent upon who pays the premiums of the policy. In addition, different people can have separate insurable interests in the same subject matter or property.

insurable interest

noun acceptable insured, acceptable risk, capable of being insured, insurable ownerrhip, insurable risk, insurable stake, legitimate interest, stake, sufficiently close relationships, vested interest
Associated concepts: life insurance

insurable interest

a person has such an interest in property or in the life of a person if damage or destruction of the property or death of the person would expose him to pecuniary loss or liability. See INSURANCE.

INSURABLE INTEREST. That right of property which may be the subject of an insurance.
     2. The policy of commerce, and the various complicated rights which different persons may have in the same thing, require that not only those who have an absolute property in ships or goods, but those also who, have a qualified property in them, may be at liberty to insure them. For example, when a ship is mortgaged, and the mortgage has become absolute, the owner of the legal estate has an insurable interest, and the mortgagor, on account of his equity, has also an insurable interest. 1 Burr. 489. See 20 Pick. 259; 1 Pet. 163.

References in periodicals archive ?
challenge the insurance contract for lack of insurable interest amounts
Holding: This court finds that the Colorado Supreme Court would reasonably decide, based on existing case law, that A has an insurable interest in the employees insured under the P policies.
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.
In judicial states, the foreclosing party must also pursue and obtain a deficiency judgment to preserve its insurable interest.
There are so many groups with an insurable interest in Beckham that it is impossible to know what the final bill might be if he were ever permanently injured," Thomas observes.
The Court answered "yes" to the question, finding that Debra had sufficient insurable interest under the facts of the case to qualify as an insured subject to full policy benefits.
These points--duty of disclosure, breach of warranty, insurable interest, indemnity and regulatory authorization--can become issues of contention because cultural differences exist between the ways banks and insurers approach transactions, particularly influenced by the legal principles of insurance contracts.
Since the Tax Reform Act of 1986 (TRA '86), Congress has increasingly reduced the amount of interest that can be deducted on debt incurred with respect to company-owned life insurance (COLI) policies in which the taxpayer has an insurable interest.
Andersen: In terms of partnerships, the Minnesota state legislature recently passed a law to accommodate insurable interest.
In case of insurable interest Contracting Authority is not required to be insured, and the duration of the contract may submit a new object of insurance beyond the previously indicated.
Wouldn't this be insurable interest in order to cover the loss of ground lease income?