Without something to insure, insurance is pointless. That should be a no-brainer. So what exactly does one insure? It’s not as silly a question as it seems.
You can’t insure just anything and expect to recover a claim from it. This is why no auto insurance company will cover the Junker rusting away in your front yard which doesn’t even run.
The insured must also have a tangible interest in the entity insured. This is why you can insure your own car and place your spouse and children on the policy as drivers, but not the guy across the street just because you want to.
In order to properly indemnify the insured in a claim situation, an insurance company must make sure it is insuring something of value such as a car, a house or a life, the loss of which would cause financial hardship. This is the concept of insurable interest.
You must also own the item in question to have insurable interest. For example. If a storm knocks over a tree which damages both your car and your neighbour’s, you would have insurable interest in your vehicle but not your neighbour’s.
