Advanced English Dialogue for Business – Insurable interest

Listen to a Business English Dialogue About Insurable interest

Jordan: Autumn, do you know what insurable interest means?

Autumn: No, what is it?

Jordan: Insurable interest is when someone has a financial stake or stands to suffer a loss if the insured property is damaged or destroyed, such as owning a house and having homeowner’s insurance.

Autumn: How does insurable interest relate to insurance policies?

Jordan: Insurance companies require policyholders to have insurable interest in the insured property to prevent individuals from profiting from the insurance payout without having a genuine financial interest in the property.

Autumn: Can you give me an example of insurable interest in a business context?

Jordan: Sure, if a business loans equipment to another company, the loaning business may require the borrower to obtain insurance on the equipment to protect both parties’ financial interests in case of damage or loss.

Autumn: What happens if someone lacks insurable interest but wants to purchase insurance?

Jordan: If someone lacks insurable interest, they typically can’t purchase insurance on the property because they wouldn’t suffer a financial loss if the property is damaged or destroyed, which goes against the principle of indemnity in insurance.

Autumn: Are there any exceptions to the insurable interest requirement?

Jordan: In some cases, such as life insurance, a person may have insurable interest in another individual’s life if they are financially dependent on that person or would suffer a loss if they passed away.

Autumn: How do insurance companies verify insurable interest?

Jordan: Insurance companies may request documentation or evidence demonstrating the policyholder’s financial interest in the insured property, such as ownership records, lease agreements, or financial statements.

Autumn: Thanks for explaining, Jordan. Insurable interest seems like a fundamental concept in insurance that ensures the policyholder has a genuine financial stake in the insured property.