Insurable Interest

It is fundamental principle of insurance law that for an insurance policy to be valid, the policy holder must have an Insurable Interest. Basically, this means that the policy holder must be able show that they would suffer some loss from the destruction of the insured item, or gain some benefit from its preservation. In most homeowner policies, this should not be a problem, unless ownership of the property is under some question or dispute. The matter of Insurable Interest often arises in contents insurance claims.

Example: On Friday, Mrc X left his expensive, gold Rolex watch with his close friend Mr. Z so that Mr. Z. Could drop it off at the Rolex store for servicing. Over the weekend, Mr. Z’s home was broken into, and amongst the items stolen was Mr. X’s watch. When Mr. Z filed his insurance claim he included the watch in the claim. However, the Loss Adjuster disallowed the claim for the watch on the basis of a lack of “insurable interest”. As Mr. Z did not own the watch, he did not suffer a loss.