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BL – Nov 2015 – L1 – SA – Q19 – Company Law

Definition of insurable interest in insurance law.

A person is said to have insurable interest in an insured person, thing, or event when
A. He is related by affinity to the insured
B. The insured is the property of the person
C. The insured is a chattel
D. He stands to gain or profit in his/its preservation and to suffer loss or damage in his/its destruction
E. The insured could go into extinction by usage

D. He stands to gain or profit in his/its preservation and to suffer loss or damage in his/its destruction

Explanation:
Insurable interest exists when a person benefits from the preservation of the insured subject and would suffer a loss if it is damaged or destroyed. This is a fundamental principle in insurance law.

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