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Chapter 4 Insurable interest 4/7
Question answers
4.1 Yes, there is an insurable interest in both of these situations:
• You may be liable to pay for or replace the watch if it is damaged when the loan is repaid.
• Because the owner will require compensation from you if it is lost or damaged.
4.2 • The extent of the mortgage.
• The extent of the interest in the apartment. However, a joint owner is treated as a trustee for the other owner
and may insure to the full value of the apartment.
Sample examination question answer
1. The correct answer is C.
In general insurance (i.e. not marine or life business), there must be insurable interest firstly at the time of
inception of the policy and secondly at the time of the loss. Reference copy for CII Face to Face Training Chapter
4
