When must an insurable interest exist in order for an insured loss to be met under a fire policy?

An insurable interest must exist both at the time the insurance contract is effected and at the time of loss in order for an insured loss to be met under a fire policy. This requirement ensures that the insured has a legitimate stake in the insured property, which can help prevent moral hazard, where individuals might cause a loss to claim insurance benefits without any real concern for the property.

When an individual or business takes out an insurance policy, they must be able to demonstrate that they would suffer financially from the destruction or loss of the property covered by the policy. This helps maintain the integrity of the insurance system, ensuring that insurance is used for its intended purpose—to provide financial protection against actual risks—rather than as a means for gaining financially from intentional damage or occurrences.

If insurable interest were only required at the time of loss or just at policy inception, it could lead to situations where individuals could take out policies on properties they do not own (or have any real stake in) and then manipulate circumstances to claim benefits. Therefore, the dual requirement reinforces the principle that there must be a genuine financial interest in the property throughout the duration of the policy.