Insurable Interest refers to a person's financial or emotional stake in an asset, which makes them eligible for insurance coverage. In other words, it is the potential loss that a policyholder would suffer due to the occurrence of an unforeseen event, such as damage to property, illness, or death.
For example, if you own a car and have taken out auto insurance, your insurable interest in the vehicle is the amount of money you paid for it, plus any outstanding loans or liens against it. If something were to happen to the car, such as an accident or theft, your insurable interest would be affected, making you eligible for compensation under the terms of your auto insurance policy.
In summary, Insurable Interest is a requirement for obtaining insurance coverage and refers to the potential loss that a policyholder could suffer due to unforeseen events.