Kapasu Insurance Services Inc. Blog
Many events or hardships can cause a significant financial loss in business and commerce. In this case, insurable interest could help you. But, what is insurable interest?
Understanding Insurable Interest
During the issuance of an insurance policy, the insurable interest is required to be present in the company or existing entity before coverage can begin. The insurance exists to protect you from the loss of this individual or event and in so causing financial hardship.
To better understand this, insurable interest will apply to a specific entity. For example, a loss of important personnel like your CEO may bestow insurable interest to the company’s head. Another illustration is that a certain NBA team may have insurance on a star player or the coach.
Property Insurable Interest
A policyholder who owns a homeowner’s insurance will be covered if events threaten to destroy their home. On top of that, the insured individual can have insurable interest over the property.
If the property is destroyed, it causes significant loss to the owner. Therefore, the homeowner is insuring the house if there’s an unforeseen event in the future.
It’s worth noting that there is an underwriting clause that prevents someone from insuring something or someone that exists outside of their benefit (i.e. someone else’s home) as it could encourage the destruction of their property for financial gain.
The Indemnification Principle
This principle states that an insurance policy has to pay the policyholder in case of loss. Although this is true, the losses should not reward nor penalize holders. Why? The governing policies should govern the worth of the asset. If not, there will be undesirable and unbalanced premiums for the policyholders.
To sum it up, the insurable interest is the starting point of all insurance policies. Additionally, as the policy owner, you must purchase insurance to employ the insurable interest.
At Kapasu Insurance Services Inc., we do our best to ensure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (760) 995-3853 or Click Here to request a free quote. Coverage discussed in this article is not guaranteed. Please contact our agency to go over your existing coverage. We are happy to help you make sure your needs are being met!
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