The “Loss in Progress” Rule – 2
In most first party situations the issue is when the loss manifested itself. When a loss is “known or apparent” before a policy of insurance is issued, there is no coverage. For example, a building catches fire and burns to the ground on December 31. Two days later the owner, unaware of the fire, buys a fire insurance policy. The loss is neither “known or apparent” to the insured but he has no insurable interest in the property since a second fire could do no damage. Although the loss was unknown to the insured, it was no longer contingent. Because fire destroyed the property before the policy was acquired the insured could not have an insurable interest in the property. A property cannot be destroyed twice. If it has no value at the time it is insured its further destruction will leave a property that still has no value.
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