What does 'Insurable Interest' mean?

Insurable interest refers to the principle that an individual or entity purchasing insurance must have a legitimate stake or interest in the insured item or person. This means that they would suffer a financial loss if that item were damaged or destroyed. Option B captures this concept accurately, stating that you cannot profit from the loss of something you don’t own. This principle prevents individuals from taking out insurance policies on items they do not hold an interest in, ensuring that insurance is used for protective purposes rather than financial gain from others' misfortunes.

The other options suggest interpretations that do not align with the fundamental principles of insurance. For instance, the idea that you can insure anything you wish overlooks the necessity of having an insurable interest. Similarly, saying you can insure anything as long as it's valuable ignores the requirement of ownership or stake. Lastly, the notion that you must declare assets with no associated financial risk is misleading, as insurable interest explicitly relates to the financial risk one faces from loss or damage to an asset.