Insurable Interest

True, valid, determinable, and direct economic stake of an insurance policy holder (or of the beneficiary of the policy) in the continued existence or safety of the insured property or person. Often stated as “an interest in the outcome of a contingency other than that arising under the contract of insurance,” an insurable interest means that the policy holder (or the beneficiary) must stand to suffer a direct financial loss if the event (against which the insurance cover was bought) does occur. A tenant may not necessarily have a direct insurable interest in the rented property but the landlord may.

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