What is Insurable Interest? Why You Can’t Insure Everything

March 2026

The purpose of insurance is to place you, as far as possible, in the same financial position after a loss as you were in before the loss occurred**, subject to the terms and limits of the policy.**

If you will not suffer a financial loss from the loss of or damage to property (such as a car or an item in your home), then you generally cannot insure that property. To put this another way, you must have an insurable interest in the property you propose to insure. 

It is obvious that if you own something, having paid for it, then you have an insurable interest in it. If someone steals your bicycle, you will suffer financially from that loss. 

In many cases, ownership isn’t always as clear-cut. What if you have a mortgage on your home? The bank or building society has a financial interest in the property. What if your car has been leased to you? A finance company may be the legal owner of the car. 

The terms of your mortgage or car finance agreement will typically make you responsible for the upkeep of the property. It may also be a condition of the agreement that you insure the property. In these circumstances, you have an insurable interest in the property because you would suffer a financial loss if it were damaged or destroyed.

There are circumstances in which you can insure property that you do not legally own. 

For example, you may request that a temporary replacement car loaned to you by a garage be added to your policy while your own car is being repaired or serviced. Your insurer may agree to do so on the basis that you are responsible for any loss or damage that occurs while the car is in your possession**, subject to policy terms and insurer approval.** 

Similarly, Allianz Home Insurance policies may provide limited cover for property owned by visitors or guests while it is within the insured home**, subject to policy definitions, limits and exclusions.** 

To sum up, if you stand to lose financially from loss or damage to property, you are likely to have an insurable interest in it. The existence and extent of insurable interest will depend on the specific circumstances and the terms of the policy.

No. Under the principle of insurable interest, you cannot insure property if you do not suffer a direct financial loss from its damage. Insuring something you have no financial stake in would generally be considered unenforceable as a contract of insurance.

Yes. Because the bank has provided a mortgage, it has a financial stake in the property. This is why lenders typically require you to note their interest on your insurance policy and ensure adequate cover is in place.

If it is established that you had no financial interest in the property at the time of the loss**, or at the time required by law depending on the type of insurance**, the insurance contract may be considered void or unenforceable, and the insurer may decline the claim**, subject to applicable legislation and policy terms.**

Information correct as at 02/03/2026