Which of the following is true in relation to insurable interest?
A)Shareholders do not have a sufficient interest in the assets of a corporation to take out insurance on them and receive compensation if they are damaged or destroyed.
B)If Chuck takes out insurance on his ex-wife's home and it burns down,he will be able to collect from the insurance company.
C)If Joe has an insurable interest in property,he will likely enjoy an insurance windfall in the event of a loss of that property.
D)If Sam arranges a comprehensive,all-risk insurance policy,this will guarantee that he holds an insurable interest in the insured property.
E)If Mr.Cole takes out the proper insurance on his home and it burns down,he will be able to collect from the insurance company.

Question

Quizplus · Accepted Answer

Insurable interest refers to having a legal or financial interest in the property being insured, such as ownership or a contractual obligation. Option A is incorrect as shareholders can have an insurable interest in the assets of a corporation if they have a legal or financial interest in them. Option B is incorrect as Chuck does not have an insurable interest in his ex-wife's home. Option C is incorrect as having an insurable interest does not guarantee an insurance windfall - the compensation from the insurance company will be limited to the extent of the interest held. Option D is incorrect as having an insurance policy does not guarantee an insurable interest - the policyholder must still have a legal or financial interest in the property being insured. Option E is correct as Mr. Cole has an insurable interest in his own home as he has legal ownership of it.

Which of the Following Is True in Relation to Insurable