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Insurable Interest: What’s In It For You?

Insurable Interest: What’s In It For You?

Insurance can be a big expense for businesses or individuals. However, some may choose to insure everything (or everyone) that they can in order to protect themselves financially. The main thing to remember if you are looking to purchase any type of insurance is a concept called “insurable interest”. What is it, and do you have it? Let’s find out. Why Does Insurable Interest Matter? The basic tenet of insurance is to “make whole”. For example: If you own a home or a building and you lose it in a fire, then insurance will pay to replace it. That will make you whole again – by replacing your building or home so that you once again have a place to work or live. Of course, there are other things that factor into it (coinsurance, depreciation, etc) but the main idea of making a person or business whole again is that you’ve lost something you owned or had an insurable interest in. What Can You Insure? Just about anything can be insured by anyone. You can get life insurance on your spouse and children. You can insure your home, your business building, your personal and company vehicles.  You can purchase life insurance on someone other than a spouse or child. You can even insure buildings you don’t own.  For example: let’s say you’ve run out of storage space in your house. Your next-door neighbor lets you store some of your belongings in his backyard shed. You decide that since your stuff is in the shed, you’re going to purchase insurance on the shed and the contents. The shed gets struck...
When NOT to Buy Insurance

When NOT to Buy Insurance

There are many good reasons to purchase insurance. Hayes Brokers can tell you every single one of them. But when should you NOT buy insurance? When (After) You Have A Claim Many businesses try to control costs by not purchasing certain types of insurance when they are suggested or offered by a broker. The most common types of insurance that are declined are: comprehensive and collision coverage for vehicles, directors & officers liability insurance, property insurance, flood insurance, and cyber liability. Unfortunately, insurance cannot be purchased after-the-fact to cover a claim. If a tree falls on your car and you call your insurance agent to add comprehensive coverage that day, you’ll get comprehensive coverage, but it will exclude prior damage. The next time a tree falls, you’ll have coverage. This time, no coverage. In the case of coverage like Directors & Officers Liability insurance, a claim for damages may not come to light for months, or even years. D&O cannot be backdated to cover prior claims. The best time to purchase coverage is before a claim happens Since you don’t know when a claim might occur, the time to purchase coverage is now. When It Isn’t Yours You can purchase insurance on anything or anyone at just about any time. However, the insurance policy will not pay you unless you have an insurable interest in the person or object. For instance, you can purchase insurance on your next-door neighbor’s house. However, if his house burns down, you won’t receive a check, since you have no insurable interest in the home. What is insurable interest? It is a concept that...