Molly's neighbor, Steve, is quite careless and is in danger of burning his house down. Molly tried to buy a fire insurance policy on Steve's house, so she could collect the payment when Steve inevitably burned down his own house. The insurance company would not allow Molly to purchase the policy because she did not have an insurable interest in the property.

Question

Quizplus · Accepted Answer

To have an insurable risk, Molly must have an insurable interest, which means that the policyholder (Molly) is the one at risk to suffer a loss. Molly cannot buy fire insurance on Steve's house and collect if it burns down.

Molly's Neighbor, Steve, Is Quite Careless and Is in Danger