An insurable interest may arise when a party has sufficient economic interest in the transaction to entitle them to insure the property involved.

Question

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An insurable interest exists when an individual or entity stands to suffer a financial loss or certain other kinds of losses if the insured property is damaged or lost. This legal requirement ensures that insurance contracts are valid and enforceable, preventing gambling on the misfortune of others.

An Insurable Interest May Arise When a Party Has Sufficient