Who has an insurable interest in a claim?

An insurable interest exists when an individual or entity has a stake in the preservation of an asset and would suffer a financial loss if that asset were damaged or destroyed. In the context of a motor vehicle claim, a lienholder is typically any individual or institution that has a legal right to the property until a debt obligation related to that property is satisfied. This means they have a vested interest in the vehicle being insured because if the vehicle is damaged, their ability to recover the outstanding debt could be jeopardized.

Thus, a lienholder listed on ownership papers has a clearly defined insurable interest in the claim since their financial investment is tied to the condition of the vehicle. They would be directly affected by any loss associated with the vehicle due to their financial stake.

In contrast, while a spouse may certainly care about the policyholder’s welfare and financial matters, their insurable interest may not be as clearly defined unless they are specifically named on the policy or have a legal or financial stake in the vehicle. Friends or relatives not mentioned on the policy lack the necessary financial connection to claim an insurable interest, as they do not face a financial loss in the event of damage or destruction of the vehicle.