Nevada Property and Casualty (P&C) Practice Exam

In a property insurance policy, insurable interest must be proven at the time of loss. This requirement ensures that the policyholder has a legitimate stake in the insured property, which is fundamental to the principles of insurance. When a loss occurs, the insurer must verify that the insured party had an insurable interest in the property at that time; this helps prevent moral hazard or fraudulent claims. The concept of insurable interest is crucial because it aligns the interests of the insured with the insurer, discouraging insured parties from deliberately causing losses since they have a financial interest in the property.

While proving insurable interest at the inception of the policy is necessary for starting coverage, the critical moment for validation is during the actual occurrence of a loss. This ensures that the insured has the right to recover any losses suffered. The other options, such as renewal or claim submission, are not points where insurable interest needs to be re-evaluated as they focus on the conditions of the policy rather than the relationship between the insured and the property during a loss event.