Arizona Adjuster Practice Exam

Which of the following entities would NOT typically hold an insurable interest in property?

1. The occupant

2. The property manager

3. The property owner's neighbor

4. The bank that lent money for the property

The correct answer is: The property owner's neighbor

An insurable interest in property refers to a financial stake or legal right to insure the property, indicating that the insured would suffer a financial loss if the property were damaged or destroyed. The occupant, property manager, and the bank all have specific, established interests in the property that allow them to seek insurance coverage. The occupant has a vested interest in the property as they live there and would face direct consequences if the property were to be damaged. Similarly, the property manager has a duty to manage the property effectively and would also be adversely affected by any potential loss or damage to it, particularly if their responsibilities include maintaining the property's value. The bank that lent money for the property has an insurable interest as well because their investment is at risk. If the property is damaged, the value of the collateral securing the loan decreases, leading to a financial loss for the bank. On the other hand, the property owner's neighbor typically does not have an insurable interest in the owner's property. While they might have concerns or some indirect implications if the property were to suffer damage, they do not have a financial stake or legal claim that could give them an insurable interest. Thus, they would be the entity that does not fit within the typical definition of holding an ins