NSVT Module 3 Practice Exam

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A homeowner sells a house and, after the sale closes, a fire damages the house. Under ordinary property-insurance principles, why would the former owner generally be unable to collect for the post-sale damage?

Subrogation bars all claims after title changes Fire is never a covered cause of loss after a sale The former owner no longer has an insurable interest in the property The policy automatically becomes liability insurance

Correct Answer:

The former owner no longer has an insurable interest in the property

Explanation:

Property insurance generally requires the insured to have an insurable interest at the time of loss. After conveying the house, the former owner ordinarily no longer has the required financial interest in it.

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