What are some scenarios where an insurable interest automatically exists?

Insurable interest is a fundamental principle in insurance, ensuring that a policyholder stands to suffer a financial loss as a result of an insured event. This feature serves to prevent insurance from being used as a gambling or speculative tool.

The correct option highlights scenarios where insurable interest automatically exists, such as on one’s own life, the life of a spouse, or in employer-employee relationships.

First, individuals have an inherent insurable interest in their own lives because any loss of life would directly impact their financial situation and any dependents they may have. The same goes for a spouse, where the death could lead to immediate financial repercussions due to shared finances and familial responsibilities.

Moreover, employer-employee relationships also demonstrate a clear insurable interest. Employers typically have a vested interest in the lives of key employees, as their loss could affect not just the operational integrity of the business but also result in financial harm, either through costs associated with recruitment and training of replacements or through lost productivity.

In contrast, scenarios described in the other choices either lack the same level of inherent economic interest or include more ambiguous relationships that do not guarantee a financial loss. For example, while friends and acquaintances may care for one another, that emotional bond does not establish the same