Question

EZ Rentals Company wants to insure the equipment that it rents to the public. To obtain insurance, EZ must have an insurable interest in the property:

a. at the time a loss occurs.
b. at any time.
c. continuously from the time a policy is obtained to the time a loss occurs.
d. at the time a policy is obtained.

Answer 1

EZ Rentals Company must have an insurable interest in the property at the time a loss occurs to obtain insurance for the equipment it rents to the public. This allows the company to prove financial loss and be compensated by the insurance company when a covered peril affects the rented equipment. Thus, the option a is the correct answer.

Step-by-step explanation:

The question concerns insurable interest, a fundamental principle in the insurance industry. EZ Rentals Company, in this scenario, seeks to obtain insurance to cover the equipment it rents to the public. An insurable interest means that the insured must have a stake in the insured property that would result in a financial loss if the insured event occurs. For EZ Rentals to successfully claim on its insurance policy for any damaged or lost equipment, it needs to establish that it had an insurable interest in that equipment.

To answer the specific question, EZ Rentals Company is required to have an insurable interest in the property:

• at the time a loss occurs.

This condition ensures that the company can prove its financial loss due to the damage or loss of the rented equipment and thus can be indemnified by the insurance company.