Insurable Interest

Insurable interest is a fundamental principle in insurance stating that a policyholder must have a legitimate interest in the life, property, or well-being being insured. This means that if something were to happen to the insured item, the policyholder would suffer a financial loss. For example, a homeowner has insurable interest in their house, as they would face financial consequences if it were damaged. Insurable interest helps prevent insurance from being used as a gambling tool and ensures that policies are taken out for genuine protection purposes.