What is required for insurable interest to exist in crop insurance?

For insurable interest to exist in crop insurance, it is essential that the person must stand to lose life or property at the time of loss. This principle is fundamental to insurance; it ensures that the insured party has a legitimate stake in the insured asset. In the case of crop insurance, having an insurable interest means that the policyholder will suffer a financial loss if the crop is damaged or destroyed. This connection legitimizes the insurance contract, making it possible for the insurer to provide coverage with the understanding that the policyholder is genuinely affected by the outcome of the insurable event.

While having a commercial interest in the crop may often coincide with the need for insurance, it does not exclusively define insurable interest. A crop could be commercially viable or assessed for profitability, yet that does not guarantee that the owner will face a loss at the time of damage. Similarly, the insurance company’s valuation agreement, or the requirement for the crop to be profitable, are not foundational criteria for establishing insurable interest. Instead, the key aspect is the direct risk of financial loss, which justifies the need for the insurance protection.