What is 'insurable interest' in property insurance, and when must it exist?

Insurable interest in property insurance is a financial stake in the property — ownership, lease interest, security interest (like a mortgage), or other legitimate claim that creates risk of loss. Unlike life insurance (where insurable interest is required only at the time of application), property insurance requires insurable interest at the time of the loss. The principle prevents purchasing insurance on someone else's property without a legitimate stake. Multiple parties can have insurable interests in the same property simultaneously: the homeowner, the mortgage lender, a tenant, a contractor working on the property. Each may carry insurance protecting their specific interest. Insurance pays only for the extent of the insured's actual loss, regardless of how much insurance was carried.