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Insurance Principles Legal Principles
Which ONE of the following is a fundamental principle of insurance law that requires a policyholder to have a financial interest in the insured item or life?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) Insurable InterestCorrect
- b) Utmost Good Faith
- c) Indemnity
- d) Subrogation
Why this is the answer
The principle of 'Insurable Interest' states that the policyholder must stand to suffer a direct, measurable financial loss if the insured event occurs. Without this, the contract is a wager and is unenforceable.
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