Louisiana Requires an Insured to have an Insurable Interest in the Insured Property

Since 1948, the expressed public policy of the State of Louisiana, by the Louisiana Legislature, has been that an insurable interest is required of persons seeking protection from property insurance, so as to differentiate an enforceable indemnity agreement from a wagering pact. La. R.S. 22:614 provides that no contract of insurance on property or any interest therein or arising therefrom shall be enforceable except for the benefit of persons having an insurable interest in the things insured. Insurable interest means any lawful and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage.

Generally, the interest of the insured sought to be protected must have for its object the obviation of pecuniary or financial loss to or liability of the assured which would otherwise result from damage to or destruction of the insured property. If the loss or damage to the insured property does not expose the insured to either direct, immediate, or potential loss or liability, the insured is without insurable interest therein.