Definition

A part of the policy that explains how losses will be paid out in a claim. It makes sure that any payout covers the loss without leaving you with extra costs.

What to consider

  • Ensure you have a legitimate financial stake.
  • Understand the requirement for obtaining coverage.
  • Verify documentation to support your claim.

Real world scenarios

  • Before purchasing home insurance, Mark had to prove he owned the property to have an insurable interest.
  • A business owner shows insurable interest by proving ownership of equipment before getting insurance.
  • A family ensures they have insurable interest in a relative's life by demonstrating financial dependency.

Related terms

Insurance & Financial Protection