A Video Explaining Personal Indemnity and Insurable Interest

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First party property insurance is a contract of personal indemnity. The insurer promises to indemnify the first party, the insured, in the event the insured incurs a loss as a result of one of the perils insured against by the wording of the policy. Insurance does not follow title to the land. The insurer makes a promise to the first party, the insured, that if there is a loss to property in which the insured has an interest, to pay indemnity for the loss. The “elementary principle of insurance law that fire insurance” is a contract of personal indemnity, “not one from which a profit is to be realized.

The insurance claims adjuster must always ascertain that the owner, or a person with some other insurable interest in the property, is the person insured and that the person insured has an interest in the property.