What can I insure?
Whether or not you can insure something depends on a number of items, including: legality, exclusions and something called ‘insurable interest’
There is a basic rule that forbids the insurance of something illegal. For example, burglars cannot insure themselves against loss of income caused resulting from them being sent to gaol.We are certain this is not a thought crossing the minds of anyone reading this!
All insurances contain exclusions and/or restricting conditions. Some of these exclusions exist because insurers feel the premium they are charging is not designed to cater for that risk or because no premium could be large enough for the risk. Some insurers are prepared to be more flexible than others but there will always be a limit to this flexibility.
When you buy insurance you are buying a promise that the consequence of any loss you suffer will be reimbursed in accordance with policy conditions. If you insured some property owned by a friend, what would you lose if that property was destroyed? The answer in pure monetary terms is “Nothing” and underwriters would query any claim made by you. This is why it is vital that your policy is in the name of the owner(s) of the property to be insured.
In the absence of this rule a stranger could insure your house without your knowledge, arrange for it to be destroyed and collect the proceeds from underwriters.
This rule is particularly important to remember when buying or selling property. It is no good leaving the insurance in your name when you sell property because your ‘insurable interest’ disappears upon completion of the sale.
If you have a loan against your unit this will usually be reviewed as part of the claims process. However, if you are in any doubt, simply contact your broker and ask for the interest of your bank or building society to be noted. The same can be done if you own a unit with a friend and the rule of thumb is, if you are not sure about this or anything else, contact us.
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