Insurable Interest

[Willie Mays Bayes]

I have a question about this problem from the Insurable Interest quiz in section 3. I understand why D is correct, but why is C incorrect? Is there ever a case where a person has a right to insurance proceeds for property that isn't his/hers?

Jeremy is a bailee who insures bailor Sam's property for Sam's benefit. Jeremy has an insurable interest in the property but if Sam's property becomes damaged or destroyed, Jeremy
Choose one answer.
A. Retains all payable insurance proceeds. Incorrect
B. Splits the proceeds from any insurance settlement with Sam. Incorrect
C. Has no right to any insurance proceeds because it is not his property. Incorrect
D. Pays any awarded insurance proceeds to Sam. Correct

And for extra credit, is bailor Sam any relation to Sailor Sam from "Band On The Run" by Wings? :guitar:

[gaddy]

Seems to me this is just a case of getting yourself used to the Institutes' way of writing questions/answers. You will come across a handful of questions like this, where an answer seems to make sense, but another makes just a bit more sense. Choose the one that makes the most sense, obviously. Here, you have to take their words literally, meaning "no coverage rights if Sam's property is destroyed." Clearly, that doesn't help anyone, and Jeremy would have no reason to pay insurance premiums for the property he takes care of as a bailee. Since he cares for the property, he gets insurance coverage if that property is damaged.

[Vorian Atreides]

I have a question about this problem from the Insurable Interest quiz in section 3. I understand why D is correct, but why is C incorrect? Is there ever a case where a person has a right to insurance proceeds for property that isn't his/hers?

Jeremy is a bailee who insures bailor Sam's property for Sam's benefit. Jeremy has an insurable interest in the property but if Sam's property becomes damaged or destroyed, Jeremy
Choose one answer.
A. Retains all payable insurance proceeds. Incorrect
B. Splits the proceeds from any insurance settlement with Sam. Incorrect
C. Has no right to any insurance proceeds because it is not his property. Incorrect
D. Pays any awarded insurance proceeds to Sam. Correct

And for extra credit, is bailor Sam any relation to Sailor Sam from "Band On The Run" by Wings? :guitar:
The bolded should answer the question of why Answer C cannot be correct. (If it doesn't, then you better study insurable interest some more . . . it's a key concept!)

The reason that Jeremy must pay any insurance proceeds to Sam is because "[Jeremy] insures bailor Sam's property for Sam's benefit". More specifically, this clause will take precedence over Jeremy's insurable interest.

[Willie Mays Bayes]

Thanks for the help, guys. After thinking about this some more it's starting to make sense. I'll probably revisit this again before the test.