Tiempo de lectura: 2 minutos

One of the concepts that causes the most confusion among insurance users is that of insurable interest: the pillar on which coverage is built. So that you know everything about it, today on the LEX & CO blog we will tell you what insurable interest is and its importance to help you make informed decisions.


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What is the insurable interest?

The insurable interest is the relationship between the user and the insured object. Said relationship must exist when purchasing the policy and must show the client’s legitimate interest in protecting an asset or property that they seek to insure.

In simple terms, the insurable interest is a financial or economic interest of the user in an asset or property, or in its relationship with it. That is, a user cannot insure an asset in which she has no interest, as in the case of a rented house.


Why is insurable interest important?

Insurable interest has a direct impact on the expected coverage. Following the example of a rented house, since it is not the client’s property, the insurer could deny coverage. This means that insurable interest ensures that only property in which the customer has a legitimate interest will be insured and provides the basis for cover in the event of damage, theft or loss.

Another example in life insurance: for a client to insure or name another person as beneficiary, there must be a legitimate interest.

For insurers, insurable interest helps them ensure that only property in which customers have a legitimate interest will be insured, which helps prevent fraud and allows them to provide better services.


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Does insurable interest influence the insurance premium?

Yes. The insurable interest is essential for the insurance contract to exist. Without this, the contract lacks foundation and the insurer may refuse to protect an asset or property.

Now, the insurance premium is based on the value of the insurable interest: the higher the financial risk, the greater the amount of the premium, and the greater the risk assumed by the insurer.


Can they deny me payment?

Determining insurable interest prevents customers from fraudulently purchasing an insurance policy. The insurer must determine this to approve the policy and give the right to collect compensation to the client.

If a direct link is not found between the client and the property being insured, it is likely that the insurer will deny the policy.


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