Insurable Interest Clauses require you to have a financial interest in the car you are insuring.

Basically if you are not the registered owner of the car, then the carrier can deny coverage!

Insurable Interest requires you to have a legal interest in property. This means that you (the policyholder) must be the legal owner of the property insured.

This used to become an issue when a teenager (not leaving at home) was given a vehicle as a gift (titled to him) by his/her parents. The parents would add the vehicle to their policy and pay extra premium.

When there was a claim, the carrier would claim that the parents did not have an insurable interest in the vehicle, and therefore the insurance company did not owe for the loss.

Insurance carriers are taking premium and they are aware of the ownership situation. Because of this, they are no longer using this clause in their policies or not enforcing them.

In addition, many states have declared them illegal. If your insurance company is quoting this policy to exclude coverage, be sure to research your state legislation on this subject. Your insurance just might be trying to pass one on you.

Insurable Interest clauses can work their way into your policy. If they are, make sure you read it carefully. If there is ambiguity, the clause will be interpreted in your favor!