In this episode of my blog series we’re headed to South Carolina, the Palmetto State, to define insurable interests.
In Powell v. Insurance Company of North America,1 the Court of Appeals of South Carolina laid out the road map to insurable interests:
In this country, it is a rule of law that one cannot insure for his own benefit the property of another in which he has no interest.  Insurance law accepts as a settled rule that an insured must possess an interest of some kind in the subject matter of the policy.  Regarding property insurance contracts in particular, if the insured has no interest in the property, he sustains no loss by the property’s destruction.  In order to recover on a policy of insurance, the insured must prove an insurable interest in the property both at the time the policy is used and becomes effective and at the time of the loss. 2
Powell cited the Supreme Court of South Carolina in Crook v. Hartford Fire Insurance Company,3 in defining in what constitutes an insurable interest:
It may be said, generally, that any one has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction.  An insurable interest in property is any right, benefit or advantage arising out of or dependent thereon, or any liability in respect thereof, or any relation to or concern therein of such a nature that it might be so affected by the contemplated peril as to directly damnify the insured. 
If you have any suggestions on certain states or would like to know how your state defines insurable interests, be sure to send me message.
As always, I’ll leave you with a (mildly) related tune. Here’s South Carolina’s own, James Brown, with I Got You (I Feel Good):
1 Powell v. Insurance Co. of North America, 285 S.C. 588, 589-90 (Ct. App. 1985).
2 Id., at 589-90.
3 Crook v. Hartford Fire Ins. Co., 175 S.C. 42, 48 (S.C. 1934).