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Insurable interest in a third-party ownership situation must exist at:

User Cliff W
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1 Answer

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Final answer:

Insurable interest in a third-party ownership situation must exist at the time of the insurance contract. It refers to a legal and financial interest in the property being insured.

Step-by-step explanation:

In a third-party ownership situation, insurable interest must exist at the time of the insurance contract. Insurable interest refers to a legal and financial interest in the property being insured, which can be an ownership interest or a potential liability.

This means that the person or entity purchasing the insurance policy must have a valid reason for insuring the property, such as a financial stake or a potential loss if the property is damaged or destroyed.

For example, in the context of property insurance, if a landlord owns a building and rents it out to tenants, they have an insurable interest in the building because they have a financial interest in it.

The tenants, on the other hand, do not have an insurable interest because they do not own the building and would not suffer a direct financial loss if it were damaged.

Insurable interest is an important concept in insurance law to prevent individuals or entities from obtaining insurance on someone else's property without a legitimate reason or potential liability. It ensures that insurance contracts are based on a valid legal and financial interest, protecting the integrity of the insurance industry.

User Alan Deep
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