Which situation is insurable? A) Eileen wants to insure her sister’s

QUESTION

Which situation is insurable?

A) Eileen wants to insure her sister’s house against termite damage.
B) Billy wants to help his father by holding the workers’ accident insurance for his father’s steel working company.
C) Robert wants to take out a policy to protect his nephew’s store from theft.
D) Maxine wants to insure the home office she has in her basement and works from every day.
E) Freida wants to do her low-income neighbor a favor by insuring his house for him.

ANSWER

Answer: D
Explanation: D) Maxine is the only one of the five answer choices who has an insurable interest. That is, she is the only potential policyholder who can demonstrate that he or she stands to suffer a loss from the specific risk that is being insured.