Jasz
VIP Contributor
Insurable interest is a legal concept that refers to the right of an insurer to recover money from an insured. It typically applies in cases where the insured has been injured or damaged, but it can also refer to other circumstances. Insurers typically won't pay for insurable interest unless there is some sort of coverage on the policy. For example, if you have collision coverage on your car insurance and are involved in an accident that damages your car, the insurance company will likely pay for any repairs needed under their policy so long as you weren't at fault for the accident (i.e., you were hit by another driver).
However, if you're hit by a falling tree and need to file a claim with your auto insurance company—and they deny it—they may be able to collect money from you through insurable interest. Insurable interest is defined by the policy as the part of the loss that could have been avoided, provided it had been insured. For example, if a fire destroys your house and you don't have home insurance, it doesn't matter that you purchased homeowner's insurance—the part of your loss covered by your homeowner's policy won't count toward coverage under your home insurance policy.
However, if you're hit by a falling tree and need to file a claim with your auto insurance company—and they deny it—they may be able to collect money from you through insurable interest. Insurable interest is defined by the policy as the part of the loss that could have been avoided, provided it had been insured. For example, if a fire destroys your house and you don't have home insurance, it doesn't matter that you purchased homeowner's insurance—the part of your loss covered by your homeowner's policy won't count toward coverage under your home insurance policy.
