John has decided that his neighbor Sam is quite careless and is in danger of burning his own house down. John tried to buy a fire insurance policy on Sam's house so that he could collect the payment when Sam inevitably burned down his own house. The insurance company would not allow John to purchase the policy because he did not have an insurable interest in the property.

Question

Quizplus · Accepted Answer

Insurance companies require the policyholder to have an insurable interest in the property being insured. This means that the policyholder must have some financial stake or loss that would result from damage or loss to the property. In this case, John does not have an insurable interest in Sam's house, as he does not own, rent, or have any other financial relationship with the property. Therefore, the insurance company would not allow him to purchase a policy on Sam's house.

John Has Decided That His Neighbor Sam Is Quite Careless