Insurable interest, though a legal concept is not synonymous with legal interest.
The interest recognized at law as insurable interest may be defined as the insured’s pecuniary interest in the subject matter of the insurance.
Thus, A buys a Peugeot 505 for one million naira. That is the maximum in respect of which he can insure the vehicle. The emphasis is on quantifiably of the interest to be insured.
It does not matter therefore, that A may have become sentimentally attached to his car. Such an interest is not insurable.
Therefore if there is a right existing in respect of the subject matter which some court will enforce, a right whose value depends upon the continued existence or destruction or demise of the subject matter, so that the holder of the right stands to gain or suffer pecuniary damage, depending on whether the subject matter continues to exist or suffers damage or destruction there exist insurable interest.
Finally insurance on property and goods are contracts of indemnity. This means that an insured person can only recover in respect of a loss if he has an insurable interest in the property at the time of loss