In general when does a person have insurable interest in the subject matter insured? This could be a bit tricky question which makes a person think.
A person is said to have insurable interest when he has such relation or connection with, or concern in, such subject matter that he will derive pecuniary benefit or advantage from its preservation or will suffer pecuniary loss or damage from its destruction, termination, or injury by the happening of the event insured against.
Insurable interest to the property is necessary because if the person procuring insurance has no insurable interest in the subject matter of the insurance, the contract is void. This is a consequence of the principle that insurance is a contract of indemnity. If the insured has no insurable interest on the subject matter of the insurance, he will stand to suffer any loss or damage by the happening of the event insured against.
Insurable interest in life exists when there is reasonable ground founded on the relation of the parties, either pecuniary or contractual or by blood or affinity, to expect some benefit or advantage from the continuance of the life of the insured. It need not be based upon a right which can be enforced in law or in equity. Insurable interest in life exists at the time of the effectivity of the policy and need not exist at the time of death of the insured, as life insurance is not a contract of indemnity. However, insurable interest of a creditor on the life of the debtor must exist not only at the time the policy takes effect but also at the time of the debtor’s death, for such a kind of insurance is a contract of indemnity.
Plain and simple, the implication is, when the time comes that you would like to apply for insurance, ask first if you have an insurable interest to that piece of property you are insuring.