The law concerning insurable interest is important to the buyer of insurance because it determines whether the:
A)benefits from an insurance policy will be collectible.
B)court will favor the insured in case of a dispute.
C)insured favors the contract of adherence.
D)principle of indemnity holds.
E)expectations principle is applicable in the contract.

Question

Quizplus · Accepted Answer

The law concerning insurable interest is crucial because it ensures that the benefits from an insurance policy are collectible. For a policy to be valid and for the benefits to be payable, the policyholder must have an insurable interest in the subject of the insurance at the time of the contract's inception. This means the policyholder stands to suffer a financial loss or certain types of relationships are recognized (e.g., between family members) if the insured event occurs. Without an insurable interest, an insurance contract could be considered a wagering contract and thus unenforceable.

The Law Concerning Insurable Interest Is Important to the Buyer