If Paul sold his building before a fire insurance claim, what will he receive from the insurer?

Prepare for the CII Certificate in Insurance - Insurance, Legal and Regulatory (IF1) Exam with interactive questions. Each question comes with hints and detailed explanations. Equip yourself for success!

In the context of fire insurance claims, when ownership of a building changes hands, the insurance policy typically does not cover the new owner for any incidents occurring after the sale. Since Paul sold his building prior to the fire incident, he no longer has any insurable interest in the property. Insurable interest is a fundamental principle in insurance that states the policyholder must have a stake in the property at the time of loss or damage.

As Paul is no longer the owner of the building when the loss occurred, he is not entitled to receive any payment from the insurance company. The insurer's obligation to pay out claims is to the policyholder (in this case, the new owner) who has assumed the risk at the time of the loss. Therefore, the outcome here is that Paul will receive nothing from the insurer after the building sale and subsequent fire incident. This illustrates the importance of understanding insurable interest in property insurance, as it directly impacts the rights to claims following a loss.

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