The term ‘Insurable Interest’ refers to the interest of an insurance policy taker on an insured materials or subject. Widely speaking, When a policy holder faces losses for absent to a property or subject and when faces profit for existence of that property or subject is called insurable interest. The insurable interest terms can applied in two types of insurance in different ways such as for life insurance, it should be applied on their lives on which a person is belonged and for other general insurance(fire insurance, marine insurance etc.), on the materials which related to the financial condition of an insurance policy holder.
Insurable interest is a very important condition for the insurance contract to be done. Because, without having insurable interest on a property or life, No one can complete an insurance policy. On the other hand, Insurance is called the contract of utmost good faith. Therefore, all two parties here are believed on that each party will help by providing all information truly and maintaining all conditions to be done for an insurance contract. And, by now, we know that insurable interest is a very vital considerable factor for an insurance policy to be taken and after the duration to be finalized, So It should be ensured first that the policy holder whether has insurable interest or not on the insurance policy’s subject.
Nature of insurable interest is different for life insurance and general insurance.
For life insurance…
1. Own life
2. Husband and wife’s mutual life
3. Dependent parent’s life of posterity and Children of parents
4. Account receivable’s life of account payable
For general insurance…
1. Insurable interest can be applied on only landed property on which has
own interest of the policyholder.
2. With landed property, policyholder must have financial relation.
3. For landed property, policyholder must have valid interest.
After analyzing above discussion, it is noticeable that insurable interest is something what should be present on insurance policy. If there is existed insurable interest, a person is able to take an insurance policy. Without having insurable interest, none is eligible for taking an insurance policy