What is required for a property to be insured?

For a property to be insured, ownership or financial interest is essential because it establishes a legitimate reason for the policyholder to insure the property. This requirement ensures that the insured party has a vested interest in the property, whether as an owner or a financial stakeholder, and thus has a legitimate concern for its protection. Insurers require this to avoid situations where individuals might attempt to insure properties in which they have no stake, as that could lead to moral hazard issues.

In cases where a person does not own the property or have a financial interest, insuring it would not only be questionable but could also lead to conflicts of interest and potential fraud. Therefore, having ownership or a financial interest assures the insurer that the policyholder has a direct incentive to maintain and protect the property, reducing risks for both parties involved in the insurance agreement.