In terms of insurance, when can insurable interest be checked?

Insurable interest is a vital requirement in the insurance industry, ensuring that the policyholder has a legitimate stake in the insured object or individual. This principle helps prevent insurance fraud and ensures that the parties involved have a genuine interest in the preservation of the insured item or person.

Checking for insurable interest at both the application stage and the point of claim is important for several reasons. During the application stage, insurers assess whether the applicant has a valid interest in the subject of the insurance, which is crucial for underwriting the policy. If the applicant cannot demonstrate insurable interest, the insurer may deny coverage.

At the point of claim, verifying insurable interest protects the insurer from fraudulent claims. If a policyholder claims compensation for a loss without having the necessary insurable interest, the claim can be contested, potentially leading to the denial of the claim.

Thus, the definition of insurable interest checks at both key points—application and claim—underscores the ongoing requirement for valid interest throughout the policy's lifecycle, therefore confirming that both stages are critical for validating the legitimacy of the insurance arrangement.