P&CCaliforniamedium
Maya purchases a homeowners policy on a single-family residence she does not own and in which she has no ownership, leasehold, lien, or other legal stake. Six months later the home burns. Under California Insurance Code §§ 280-281, what is the most likely consequence for Maya's claim?
AThe claim is payable because the policy was issued and premium accepted
BThe claim is payable at fifty percent because Maya lacks full ownership
The claim is void for lack of insurable interest at the time of loss
DThe claim is payable only if the property's owner ratifies the policy
Why this is the answer
California Insurance Code § 281 defines insurable interest in property as any interest, relation, or liability such that a contemplated peril might directly damnify the insured. Section 286 requires that the interest exist both when the insurance takes effect and when the loss occurs (but not necessarily in between). Maya had no ownership, leasehold, lien, or other recognized interest in the property at either time, so the policy fails the insurable-interest requirement and the contract is void under § 280 (wager contracts being unenforceable). See Ins. Code §§ 280, 281, 286.
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