Florida Insurance Claims Adjuster License Practice Exam

Why can't a partial owner of a building receive full value for the building in the event of a loss?

1. Comparative Negligence

2. Insurable Interest

3. Subrogation

4. Indemnity

The correct answer is: Insurable Interest

Insurable interest refers to the legal requirement that a person or entity must have a personal financial interest in something in order to insure it. A partial owner of a building does not have full financial interest in the property, and therefore cannot receive full value for it in the event of a loss. If they were able to, it would create a moral hazard, as they could potentially benefit from the loss of the property. Comparative negligence, subrogation, and indemnity do not directly relate to the concept of insurable interest in this scenario. Comparative negligence refers to a liability concept in which damages are reduced based on the percentage of fault of each party involved in an accident. Subrogation is the right of an insurance company to pursue legal action against a third party that caused the covered loss. Indemnity, in insurance terms, refers to the principle of making someone "whole"