All About Claims, General, Insurance in Nigeria, Insurance Terms and Terminologies, Life Insurance, Marine Insurance

Insurable Interest

Meaning

This means that proposers must have a legal interest in the person or thing to be insured.  They can insure something only if its preservation would be beneficial to them and its loss would cause them to suffer. For example, a car owner has an insurable interest in his car; a husband in his wife and houseowner in his house

Reason

The principle was introduced to prevent people from taking out what were effectively gambling policies on someone else life or property

When? 

Insurable interest must exist both at the time of contract and at the time of claim except in the following cases:

For Life insurance, the insurable interest must exist at the time of the contract but does not need to exist at the time of claim. This rule has arisen because life policies are freely assignable and are frequently used as security (collateral) for a loan

For Marine Insurance, insurable interest need only exist at the time of the claim due to the frequent change of ownership of cargoes during transit

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