What must a party have before applying for insurance?

A party must have insurable interest before applying for insurance because this concept is fundamental to the validity of an insurance contract. Insurable interest means that the applicant stands to suffer a financial loss or has a legal stake in the insured item or person. It ensures that the insured has a genuine interest in the continued existence or value of the insured item, which prevents moral hazard and discourages insurance fraud.

Without insurable interest, the contract can be considered void since there is no valid risk to insure against. For example, an individual cannot take out a life insurance policy on a stranger, as they would not suffer any financial loss if that person were to pass away. This principle serves to align the interests of the insured and the insurer, ensuring that insurance is used as a tool for protection rather than speculation or gaming the system.

While legal representation, credit history, or proof of identity may be relevant in various contexts related to the application process, they do not determine the foundation of the insurance contract itself as insurable interest does.