INSURABLE INTEREST Meaning and
Definition
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Insurable interest refers to a legal principle in insurance that establishes the relationship between the insured and the subject of the insurance policy. It is a fundamental concept that pertains to the insured's financial or personal stake in the subject matter of the insurance contract. In simple terms, insurable interest ensures that the policyholder has a legitimate interest in the insured property or person, which would be negatively impacted by the occurrence of a specific event.
Insurable interest is primarily applicable to property and life insurance policies. In property insurance, it implies that the insured party has a financial stake in the property being covered. This interest may arise from the ownership, possession, or even a potential liability towards the property. For example, a homeowner has an insurable interest in their house since any damage or loss would result in a financial burden to them.
Similarly, in life insurance, insurable interest signifies that the policyholder has a direct relationship with the insured individual that justifies their interest in the person's life. This relationship is typically based on family ties (spouse, children, etc.) or a legally recognized dependence (such as business partners or creditors).
The concept of insurable interest is vital in insurance to prevent individuals from obtaining insurance policies on entities or individuals in which they have no financial or personal attachment. By requiring insurable interest, it safeguards against moral hazards and ensures that insurance coverage is only provided when there is a legitimate financial need or potential loss involved. It helps maintain the integrity and purpose of the insurance contract while protecting against fraudulent practices.
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A condition existing between the beneficiary and the holder of a life-insurance policy according to which the former naturally desires that the latter shall live. Such a condition holds in the case of husband and wife or those of near kindred, of employer and employee, of partners in business, etc. A beneficiary who has no insurable interest in the life of the insured, cannot recover the amount of the policy in case of the death of the latter. In Canada the law provides that if the insured pays the premiums the beneficiary can recover the amount of the policy, even if he have no insurable interest.
A practical medical dictionary. By Stedman, Thomas Lathrop. Published 1920.
Common Misspellings for INSURABLE INTEREST
- unsurable interest
- jnsurable interest
- knsurable interest
- onsurable interest
- 9nsurable interest
- 8nsurable interest
- ibsurable interest
- imsurable interest
- ijsurable interest
- ihsurable interest
- inaurable interest
- inzurable interest
- inxurable interest
- indurable interest
- ineurable interest
- inwurable interest
- insyrable interest
- inshrable interest
- insjrable interest
- insirable interest
Etymology of INSURABLE INTEREST
The etymology of the word "insurable" can be traced back to the Latin word "assurare", which means "to secure" or "to make sure". This Latin term gave rise to the Old French word "assurer", which means "to insure" or "to make certain".
The word "interest" has its roots in the Latin word "interest", which was used to denote "it is of importance" or "it concerns". This Latin term entered English through the Old French word "interest", which meant "damage" or "loss", before evolving to its current meaning of "personal stake" or "involvement".
Combining these two words, "insurable interest" refers to the legal or financial stake a person has in ensuring the life, health, property, or any other subject matter against certain risks or perils.
Similar spelling word for INSURABLE INTEREST
