An absolute defense against payment exists if the insurer can show that the insured lacked an insurable interest.

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An insurable interest is a basic requirement for an insurance contract to be valid. It means that the person buying the insurance policy must have a financial interest in the subject matter of the policy. If the insured lacks an insurable interest, the insurance contract is voidable and the insurer can avoid paying any claims. Therefore, lack of an insurable interest is an absolute defense against payment by the insurer.

An Absolute Defense Against Payment Exists If the Insurer Can