Which situation exemplifies a lack of insurable interest?

The situation that exemplifies a lack of insurable interest is when a person wants to insure a friend's car. Insurable interest is a fundamental principle in insurance that requires the policyholder to have a stake or interest in the insured item or person. In this case, the individual has no financial interest or legal obligation regarding the friend's vehicle; thus, they do not stand to suffer a loss if the car is damaged or destroyed.

Conversely, the other examples demonstrate valid insurable interests. A father insuring his child's life reflects a natural interest due to familial relationships, where the father would be emotionally and financially affected by any loss. An individual insuring their own property aligns perfectly with the concept, as they would incur direct financial losses in the event of damage or theft. Similarly, a business insuring its employees recognizes the employer's investment in their workforce and potential financial impacts should an employee suffer an injury or loss while working.