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Legal Purpose

Last updated: August 25, 2017

Legal purpose is an insurance principle according to which insurance contracts that insure something illegal or involves illegal conditions are not valid. For example, a liability insurance policy for a bank robbery company would not be valid. None of the claims filed would be legally enforceable.

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Legal purpose ensures that insurance companies do not end up insuring criminal activities. Without it, the crime rate could increase due to reduced financial risk.

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