§ 3.1 Insurable Interest

• Library: Guide to South Carolina Liability and Property Insurance Law (SCBar) (2019 Ed.)

§ 3.1 Insurable Interest

An insured must have an insurable interest in the insured property in order to enforce his or her rights under a policy.¹ South Carolina courts have adopted the following definition of insurable interest: "An insurable interest in property is any right, benefit or advantage arising out of or dependent thereon, or any liability in respect thereof, or any relation to or concern therein of such a nature that it might be so affected by the contemplated peril as to directly damnify the insured."² However, it is not necessary to constitute an insurable interest that the interest be such that the event insured against would necessarily subject the insured to loss. Rather, it is sufficient that it might do so, and that pecuniary injury would be the natural consequence.³ Where an insurable interest does not exist at the time the insurance contract was made, the policy is void from its inception.⁴ An insured may have an insurable interest in property owned by another, such as in the case of a common carrier, for example.⁵ Whether a party has an insurable interest after a conveyance is a fact-specific inquiry.⁶

The South Carolina Supreme Court has provided the following explanation of what an "insurable interest" is:

"It may be said, generally, that any one has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction." 14 R.C.L. 910.
"An insurable interest in property is any right, benefit or advantage arising out of or dependent thereon, or any liability in respect thereof, or any relation to or concern

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