Insurable Interest is an economic stake in an event for which an insurance policy is purchased to mitigate risk of loss. An insurable interest is a basic requirement for an insurance company to issue a policy. Entities not subject to financial loss from an event do not have an insurable interest and cannot purchase an insurance policy to cover that event. Insurable interest is what makes an insurance contract legal and valid, and protests against intentionally harmful etc. In order to exercise an insurable interest, you must take out an insurance policy protecting the item. It is a requirement for the issuance of an insurance policy, making it legal, valid and protecting against intentionally harmful acts.
Insurers have created many tools to cover losses related to various factors such as automobile expenses, health care expenses, loss of income through disability, loss of life and damage to property. Insurable interest is a basic requirement for issuing an insurance policy that makes the entity or event legal, valid and protected against intentionally harmful acts.
Types of Insurable Interest are;
- Fidelity Guarantee Insurance,
- Credit Insurance,
- Performance Bond.