Which would have an insurable interest in real property?

Which would have an insurable interest in real property?

• A. Homeowner
• B. Tenant
• C. Mortgagee
• D. Neighbor

Answer: (C)

Insurable interest in real property exists when you would suffer a financial loss if the property were damaged. The mortgagee has such an interest because the property serves as collateral for a loan; damage to the property directly affects the lender’s security and the loan’s value, so the lender has a financial stake and is typically named on the policy. While the homeowner also has an insurable interest as the property owner, the tenant’s interest is generally limited to personal property and any leasehold improvements, not the dwelling itself, and a neighbor usually has no insurable interest in the property. Thus the mortgagee is the one who clearly has an insurable interest in real property.

Insurable interest in real property exists when you would suffer a financial loss if the property were damaged. The mortgagee has such an interest because the property serves as collateral for a loan; damage to the property directly affects the lender’s security and the loan’s value, so the lender has a financial stake and is typically named on the policy. While the homeowner also has an insurable interest as the property owner, the tenant’s interest is generally limited to personal property and any leasehold improvements, not the dwelling itself, and a neighbor usually has no insurable interest in the property. Thus the mortgagee is the one who clearly has an insurable interest in real property.