Insurable interest means if the person who wants insurance to be done has any interest in the item being insured or not. For example a human being has natural interest in own life and health (mostly), similarly he has financial interest in his property and car, he has interest in his loved ones and in his business.Therefore it makes sense for the person to insure his own life and health, his property, car, to buy life and health cover for his loved ones and business. An insurance company (carrier like Travelers, Metlife, State Farm, Safeco) wants to insure only if the person asking for insurance has or will have genuine insurable interest in the item being insured although the moment of interest varies. In property and casualty insurance genuine interest should be there at the time of loss so as to avoid fake claims. In Life insurance genuine interest is required at the time of insurance not at the time of death. One more thing is Insurable interest has relevance to the person purchasing the policy not the beneficiary. For example in life insurance someone can purchase a policy and name a charitable organization as beneficiary. Beneficiary may not have insurance interest in the insurer but that is not a problem.
Author - Webner