Who must have an insurable interest in a vehicle at the time of loss for the damage to be covered?

In the context of insurance and coverage for vehicle damage, the principle of insurable interest is critical. The insured — the individual or entity that holds the insurance policy — must have a valid insurable interest in the vehicle at the time of loss for any damages to be covered. This means that the insured must stand to lose financially from damage or loss of the vehicle; otherwise, the insurance policy cannot be applied.

This requirement prevents individuals from taking out insurance on property they do not own or have a stake in, thereby reducing the potential for fraudulent claims. Insurable interest is necessary to establish a legitimate expectation of coverage and a valid reason for the insurance contract.

For example, a vehicle owner has a direct insurable interest as they stand to lose their asset if it is damaged. Conversely, an insurance company itself typically does not hold insurable interest, as it simply provides coverage rather than owning the vehicle. Any individuals associated with the vehicle may have an interest, but without being the insured party under the insurance agreement, they would not qualify for coverage regarding losses.

Thus, the requirement that the insured must have an insurable interest at the time of loss is essential for the validity of any claim made against the insurance policy.