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Article 4. Insurable Interest: Generally of California Insurance Code >> Division 1. >> Part 1. >> Chapter 2. >> Article 4.
If the insured has no insurable interest, the contract is
void.
Every interest in property, or any relation thereto, or
liability in respect thereof, of such a nature that a contemplated
peril might directly damnify the insured, is an insurable interest.
An insurable interest in property may consist in:
1. An existing interest;
2. An inchoate interest founded on an existing interest; or,
3. An expectancy, coupled with an existing interest in that out of
which the expectancy arises.
A mere contingent or expectant interest in anything, not
founded on an actual right to the thing, nor upon any valid contract
for it, is not insurable.
Except in the case of a property held by the insured as a
carrier or depositary, the measure of an insurable interest in
property is the extent to which the insured might be damnified by
loss or injury thereof.
A carrier or depositary of any kind has an insurable interest
in a thing held by him as such, to the extent of its value.
An interest in property insured must exist when the insurance
takes effect, and when the loss occurs, but need not exist in the
meantime; an interest in the life or health of a person insured must
exist when the insurance takes effect, but need not exist thereafter
or when the loss occurs.
Every stipulation in a policy of insurance for the payment of
loss whether the person insured has or has not any interest in the
property insured, or that the policy shall be received as proof of
such interest, is void.
