In the described vehicle financing scenario, who has insurable interest in the vehicle?

• A. The individual only
• B. Country National Bank only
• C. The individual and Country National Bank
• D. Neither

Answer: (C)

Insurable interest means you would suffer a monetary loss if the property were damaged or destroyed. In a financed vehicle, the borrower is the one who owns and uses the car, so they have an insurable interest. The lender, however, has a security interest in the vehicle through a loan lien, so the bank also has a financial stake in the car. If the vehicle is totaled, the borrower loses the use and value of the car, and the bank loses its collateral that backs the loan. Because both parties would incur a financial loss, both have insurable interest. That’s why the policy typically covers both the individual and the lender (often with the lender named as a loss payee).