Asked by Anastasiia Semenenko on Jul 25, 2024
Verified
Which of the following is correct with respect to the meaning of an insurable interest?
A) An insurable interest means that the person causing the loss is required to show enough interest in what he is doing to be careful.
B) The insurance company must have received a premium before it can be said to have an interest in the agreement and be bound to pay when a claim is made.
C) The beneficiary or person receiving payment must have an ownership interest in the thing being insured.
D) The person taking out the insurance contract must be in a position that he will suffer a loss if the insured-against event occurs.
E) This term describes when a person has taken out insurance on something.
Insurable Interest
A real and substantial interest in specific property or in someone’s life.
Insured-against Event
A specific occurrence or risk covered under an insurance policy, for which the insurer agrees to compensate the insured party if it happens.
- Acquire knowledge on the topics of insurable interest, subrogation, and the application of legal principles in insurance.
Verified Answer
AC
Andres CortesJul 29, 2024
Final Answer :
D
Explanation :
An insurable interest exists when the person purchasing the insurance policy stands to suffer a financial loss if the insured event occurs. This concept ensures that insurance serves its purpose of indemnification against loss rather than becoming a speculative venture.
Learning Objectives
- Acquire knowledge on the topics of insurable interest, subrogation, and the application of legal principles in insurance.