Insurable Interest (Insurance & Financial Protection) - Definition, Examples, Advice | Bolder Money

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Definition

A requirement that you must have a financial stake in the insured item or person. It prevents people from profiting from a loss they aren’t affected by.

What to consider

Understand how loss ratios affect premium pricing.
Review historical loss ratios for trends.
Consider how a high loss ratio might impact future rates.

Real world scenarios

A health insurer reviews its loss ratio to determine the percentage of premiums paid out in claims.
A car insurance company calculates its loss ratio to assess the profitability of its policies.
An investor examines an insurer’s loss ratio before investing in its stock.

Related terms

Insurance & Financial Protection

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