Interest
Updated: 11 November 2024
What Does Interest Mean?
Interest can refer to the fee a borrower must pay to a lender in exchange for borrowing money. It can also denote a party’s stake in an insurance contract. In other words, a party’s interest represents the assets it stands to lose if the policy fails to cover the damage or destruction.
Insuranceopedia Explains Interest
People who have an interest in an asset stand to incur a significant loss if that asset is destroyed. For example, if a property owner’s building burns down, they would suffer a substantial financial loss. In this case, the building represents the property owner’s interest. Individuals with an interest in valuable assets often purchase insurance policies to protect themselves from such financial losses.
