Which of the following best describes insurable interest?
What of the following best describes the meaning or purpose of insurable interest? Insurable interest can protect business owners from fraudulent claims of creditors.
What do you mean by insurable interest?
Insurable interest is a type of investment that protects anything subject to a financial loss. A person or entity has an insurable interest in an item, event, or action when the damage or loss of the object would cause a financial loss or other hardships.
Which of the following represents insurable interest?
Insurable interest is when you have a financial stake in (or directly benefit from) the existence of an object or individual and would experience hardship if anything were to happen to it. For example, you have an insurable interest in your car because you would suffer a loss if it is damaged or destroyed.
What is the insurable interest is measured by?
The true measure of an insurable interest in real property is the extent to which the insured might be injured or damaged by the injury, loss, or other impairment.”
What insurable means?
Legal Definition of insurable : capable of or appropriate for being insured against loss, damage, or death : affording a sufficient ground for insurance. Other Words from insurable. insurability \ in-ˌshu̇r-ə-ˈbi-lə-tē \ noun.
What are the features of insurable interest?
Four features of an insurable interest
- Presence of property rights or interest.
- Potential insurable risk must be present.
- The property must have monetary value.
- The insurable risk must be legal.
- There must be the possibility of suffering financial loss in case of a risk happening.
What is an insurable interest quizlet?
Insurable Interest. The legal right to insure arising out of a financial relationship recognized at law, between the insured and the subject-matter of insurance. Features. Subject-matter, legal relationship and financial value.
Who has insurable interest in the insured?
In the case of a life insurance policy, the owner of the policy must always have an insurable interest in the life of the insured. Also, if the owner of the policy is not the beneficiary then the beneficiary named in the contract would also need an insurable interest in the insured person.
What are types of insurable interest?
There are two types of insurable interest: contractual and statutory.
How do you prove insurable interest?
To confirm that an insurable interest is present, a life insurance company will usually talk to the policy owner, beneficiary and insured. They will investigate the relationship to the proposed insured and evaluate if there is an insurable interest.
What is insurable interest in insurance example?
An example of insurable interest is a policyholder buying property insurance for their own house but not for their neighbour’s house. The person does not have an insurable interest in any financial loss arising from damage to their neighbour’s house.
Which one of the following correctly describes when insurable interest must exist for a life insurance policy to be valid?
The correct answer is (b) An insurable interest must exist when the policy is issued and when any loss occurs.
Who is not considered as insurable interest?
Similarly, a sports team may insure one of their key players. An example of insurable interest is a policyholder buying property insurance for their own house but not for their neighbour’s house. The person does not have an insurable interest in any financial loss arising from damage to their neighbour’s house.
Which of the following statement is correct regarding insurable interest in a life insurance contract?
financial test 2
| Question | Answer |
|---|---|
| Which of the following statements describes an insurable interest? | The policyowner must expect to suffer a loss when the insured dies or becomes disabled. |
| Because an insurance contract has been prepared by an insurance company with no negotiation it is considered | a contract of adhesion |
Which of the following statements is true regarding insurable interest in property and casualty insurance?
Which of the following statements is TRUE regarding insurable interest in property and casualty insurance? If the insured has no insurable interest, the contract is void. The person or entity making a claim for the damaged property must have an insurable interest in the property.
What are the essentials of insurable interest?
The key features of an insurable interest are: Property, rights, interest, life, limb or potential liability on the insured capable of being covered by an insurance policy and such must be subject matter of insurance.
What is the insurable interest in life insurance?
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.
What is insurable interest in insurance?
With life insurance, insurable interest is based on a relationship between the person applying for insurance and the person whose life is to be insured. The applicant must reasonably expect a benefit or advantage from the continued life of the insured or loss when that life ends.
What happens if there is no insurable interest in life insurance?
If no insurable interest exists when a policyowner buys a life insurance policy, the contract may still be enforced. It must exist when a claim is submitted. Life insurance has been purchased by ABC Company on the lives of two partners, Hugh and Danny, and three key employees Eileen, Vern, and June.
How do you identify insurable interest in property?
Identifying Insurable Interest. The homeowner has insurable interest in the property; losing that home would create a catastrophic loss for the policyholder. An individual cannot purchase homeowners insurance on a neighbor’s house. There is no insurable interest in a neighboring property because another entity owns it.
What is the homeowner’s interest in the property?
The homeowner has an insurable interest in the property; losing that home would create a catastrophic loss for the policyholder. It is reasonable for the homeowner to expect longevity regarding the ownership of the house. The homeowner is, therefore, insuring against the possibility that something unforeseeable causes damage.