What must an insured demonstrate to prove insurable interest before a claim is paid?

To establish insurable interest, the insured must demonstrate that they owned the item and that it wasn't covered by another insurance policy. This means that the insured has a legitimate financial stake in the item, which creates a reason for them to seek insurance coverage. Insurable interest is a fundamental principle in insurance that ensures the insured has a genuine interest in the preservation of the property.

This principle prevents moral hazard, where someone might deliberately cause a loss if they don't have a vested interest. By proving ownership and that the item is not covered elsewhere, the insured shows they would incur a financial loss if the item were damaged or lost, thereby satisfying the requirement for insurable interest. Having this financial connection is crucial for the insurance contract to be valid and enforceable.

The other considerations, such as whether the item was covered by the policy or if the insured disclosed all material facts, while important in different contexts, do not directly prove the existence of insurable interest. Furthermore, financial suffering from damage alone does not necessarily establish ownership or coverage status, which are requirements to demonstrate insurable interest effectively.