Insurable Interest

Definition

  • An asset or something of worth that an entity derives some form of benefit from and would have a reason to insure for its loss. For physical assets, insurable interest typically only exists for things the entity has partial or full ownership of. For example a person could apply for insurance coverage on their home, but not their neighbour's home. Likewise, an individual could take out a life insurance policy for a spouse or a business partner but not a complete stranger.

Synonyms
right to insure, vested interest, legitimate insurable interest, stake

Related Terms and Acronyms

  • Adequacy of Coverage Definition,
    • An assessment of how well an entity's property and assets are insured against potential losses.
  • Business Continuation Insurance Definition,
    • Insurance that provides coverage in the event that someone integral to the operation of a business dies or becomes disabled.
  • Business Life Insurance Definition,
    • Life insurance that provides coverage in the event that a person key to the operation of a business dies.
  • Entity-Purchase Agreement Definition,
    • A plan used for businesses with multiple owners where insurance policies are taken out for each owner in the amount of their ownership stake.
  • Financing Entity Definition,
    • An entity that purchases an insurance policy or settlement contract.
  • First Loss Insurance Policy Definition,
    • An insurance policy where the policyholder under-insures their assets and will only receive partial coverage in the event of a loss.
  • Insurance Policy Definition,
    • A legal contract between an insurer and entity that specifies what the insurer is required to cover and any benefits the insured entity is entitled to.
  • Life Insurance Definition, Very Important,
    • An arrangement where an insurer agrees to pay a benefit to one or more beneficiaries in the event of the policyholder's death.
    CanEquity offers life insurance.
  • Loss Payable Clause Definition,
    • An insurance policy provision for payment of a claim to someone, other than the insured's interest in the insured property. This clause basically allows an insurer to make payments to a third party in certain circumstances.
  • Property Insurance Definition,
    • Insurance that provides coverage for damages to property from a number of perils.
  • Single Interest Insurance Definition,
    • Insurance that covers a single party when more than one party has a stake in a property.
  • Stranger Originated Life Insurance (STOLI) Acronym,
    • A life insurance policy purchased by someone without any insurable interests with the insured person.
    Illegal in many Canadian provinces.
  • Underinsurance Definition,
    • When the amount of insurance coverage on an asset is less than the asset's full value.
  • Valuable Papers Insurance Definition,
    • Insurance that covers damages to valuable papers such as property deeds or wills.
  • Value Reporting Form Definition,
    • A form used to keep track of a business's current inventory value.
  • Work and Materials Clause Definition,
    • A provision that allows the policyholder to store certain materials in insured property if needed by their line of work.
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