In a real estate loan scenario, who typically has an insurable interest in the property?

• A. Borrower
• B. Insurance broker
• C. Mortgagee
• D. Neighbor

Answer: (C)

Insurable interest comes from having a financial stake in the property. In a real estate loan, the loan is secured by the property, so the lender has a direct financial interest: if the property is damaged, the lender could lose the security for the loan. That’s why the mortgagee—the lender—typically has the insurable interest and is named on the policy (often with a mortgagee clause) to protect their interest. The borrower also has an interest as the owner, but the lender’s role as the secured party is the classic insurable-interest scenario in a loan. The neighbor or the insurance broker does not have that property-related financial stake.