Vanderbilt Law Review

First Page



The basic requisite of an insurable interest pervades all types of insurance contracts.' The reason most commonly given to justify this requirement is that in the absence of such an interest the agreement is no more than a common wager. A second reason is that the absence of an insurable interest might encourage the insured willfully to destroy the property (or life) of the insured. Despite universal recognition of its need, insurable interest is a term of indefinite meaning. This is evidenced by the many opinions in which courts have had difficulty in determining the existence of such an interest. Definitions of the term necessarily are broad and largely useless in the solution of cases. The purpose of all property insurance is to indemnify the insured for casualty to the insured property. If the insured has an insurable interest there is some risk of loss to him in case of casualty to the property, and this risk may be shifted to the insurer. If, on the other hand, there is no risk of loss to shift, there is no insurable interest.