General Insurance PrinciplesQuestion 134 of 158
For PROPERTY insurance in California, when must the insured have an insurable interest in the covered property?
a.When the policy is issued, even if the interest later disappears
b.At the time of the loss
c.Both at policy issuance and at the time of loss
d.Only if the insurer specifically requests proof at application
Explanation
California follows the majority rule for property: insurable interest must exist AT THE TIME OF LOSS. (Life insurance is the opposite — interest must exist at policy inception, not at death.) A homeowner who sold the property the day before the fire has no interest at the moment of loss and cannot collect.
Law Reference: Cal. Ins. Code §280, §283Practice all 158 questions free — no signup required.
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