Explain the Insurance policy

Question

Explain the Insurance policy?

Answer 1

Personal property rights are often fragile. Because personal property is moveable, it is often difficult to locate goods that have gone missing. As well, personal property is subject to damage either innocently or in a way that does not make it worthwhile to take action against the offending party under either tort or contract law. Therefore, property owners are wise to purchase property insurance, whereby, in exchange for a premium, an insurance company promises to pay money if property is lost, stolen, damaged, or destroyed.

A person cannot buy property insurance unless he or she has an insurable interest, that is, “if a person benefits from the existence of the property and would be worse off if it were damaged”. Property insurance should, of course, be purchased for real property (i.e., buildings) as well as personal property housed in those buildings and used elsewhere in the business.