Arizona Adjuster Practice Exam

Who may have an insurable interest in certain property?

1. The property owner's family only

2. Real estate agents

3. Bank and mortgage holders

4. Only the property manager

The correct answer is: Bank and mortgage holders

Insurable interest in property refers to the financial stake a person or entity has in an asset, meaning they would suffer a financial loss if the asset were damaged or destroyed. In this context, bank and mortgage holders have an insurable interest because they have provided financing for the property. If the property were to be damaged or lost, the bank's ability to recover the amount owed on the mortgage could be compromised, thus creating a direct financial risk to them. On the other hand, while the property owner's family may have emotional or familial ties to the property, their direct financial interest in the property can be limited unless they are parties to the mortgage or own a stake in the property. Real estate agents typically do not have an insurable interest in the property unless they hold a financial stake or are involved in a financial transaction regarding the property. Finally, property managers may have a duty to manage the property but don’t typically hold an insurable interest in the same way that owners or financial institutions do. Hence, the correct answer appropriately identifies the bank and mortgage holders as entities with a clear and direct financial interest in the property.