ECONOMICS
INSURANCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Losses may or may not be calculable
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Allows an applicant to seek insurance for any other living entity
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A relationship must exist between the applicant and the insured
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A philosophical curiosity to be debated by academics
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Detailed explanation-1: -Insurable interest means an individual receives a financial or other type of benefit from the continued existence of the person insured. Thus, if the person insured were to pass away, the surviving person would experience a financial loss or other hardship.
Detailed explanation-2: -The insurable interest must be present at the time of taking policy and at the time of loss.
Detailed explanation-3: -For example, people can have an insurable interest in their homes, cars, spouse, and jobs. The extent of the interest only stretches as far as the person’s or entity’s investment reaches. For example, if two sisters co-purchase a home together worth $500, 000, they each only hold a 50% investment in that property.
Detailed explanation-4: -Normally, insurable interest is established by ownership, possession, or direct relationship. For example, people have insurable interests in their own homes and vehicles, but not in their neighbors’ homes and vehicles, and almost certainly not those of strangers.
Detailed explanation-5: -The interest that a person has in something such as a particular property or another individual, which means that the person would suffer a loss should that property or individual be harmed. In insurance law, you can only buy insurance for something or someone in which you have an insurable interest.