What is insurable interest?

1. A person is said to have an insurable interest in something if he would suffer loss or get adversely affected if that property was lost or damaged and would benefit financially from that property’s safety or continued existence.

2. In life insurance, a person has an insurable interest in another person when the death of that person would cause a financial, emotional or another type of loss.

3. Insurable interest in the property or life is the basis of insurance policies.


4. The essential thing is that there must be some property, right, life or potential liability capable of being insured.

5. Also, the relationship between the insured and the subject matter must be recognised by law.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)