What is the term for an economic interest in a property that must exist at the time of loss?

The term "Insurable Interest" refers to a legal and financial interest in a property, and it is a fundamental concept in the field of insurance. Insurable interest must exist at the time of a loss in order for a policyholder to have the right to claim insurance benefits for that property. This concept helps to ensure that the person taking out an insurance policy has a legitimate stake in the property, thereby reducing the likelihood of fraudulent claims.

For instance, if an individual owns a home and takes out an insurance policy on it, they have an insurable interest because they would suffer a financial loss should that home be damaged or destroyed. In contrast, if someone without any ownership or financial stake in the home tried to insure it, that would violate the principle of insurable interest.

Understanding this principle helps to maintain the integrity of the insurance system and ensures that insurance policies are taken out by those who will truly suffer a financial loss in the event of an insured peril. Other terms listed, such as underwriting, loss ratio, and rates, pertain to different aspects of the insurance process and do not specifically address the concept of an economic interest in property at the time of loss.