Kathmandu. Having an insurable interest or interest in an item means that you own it or that you will suffer financially if it is damaged, destroyed or stolen. Before insuring any item, it is mandatory to have an insurance offer and an insurable interest vested in such goods or property.
Why is an insurable interest necessary to insure an item?
Insurable interest is one of the main principles of determining moral risk in insurance. You have to take care of the item you are trying to insure for the benefit of the insurable. Every effort should be made to prevent damage. Damage can be caused by accidents, thefts, fires, or breakdowns. If people don’t have an insurable interest in the things they insure, insurance coverage will likely be unaffordable as claim costs spiral out of control.
Can I insure something that I don’t own?
You can also insure what you don’t have, as long as you have an insurable interest attached to it. For example, if you lease a building you own for 20 years for commercial purposes. By the time you get the building back after 20 years, the building may have lost its usefulness. But as long as that building is standing, your insurable interest in the building is considered to be attached to that day because if the building is damaged due to earthquake, fire or any other reason, you need money to build another building structure.
Another example, if your son’s motorcycle is stolen, it will add an unnecessary financial burden on you, even though the motorcycle is ridden by your son, not you. Therefore, it is also confirmed that your insurable interest is attached to that motorcycle.
Can I be insured before buying a motorcycle?
Yes, you can! If you are buying a motorcycle with a loan, you will need insurance from the dealer before you take the new motorcycle home. Because it may take a few days for the motorcycle to be transferred to your name, if there is any damage to the motorcycle, it will be a loss to you, not the seller. Therefore, it would be wise to make insurance mandatory before leaving the showroom with a motorcycle or motor car.
