State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
How does the timing of the insurable interest requirement for life insurance under California Insurance Code Section 10110 differ from the requirement for property insurance?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under CIC Section 10110, an insurable interest in life insurance need exist only at inception - when the policy is applied for and issued - and the policy remains valid even if the interest later disappears, such as after a divorce or a business dissolution. Property insurance is the opposite: an insurable interest must exist both when the coverage takes effect and at the time of the loss. This contrast is a classic exam point because the two lines of insurance test insurable interest at different moments.
Why the other options are wrong
- B) Continuity is required for neither type; life insurance is tested at issue only, and property insurance at issue and at the time of loss.
- C) This reverses the rules; life insurance is tested at issue under Section 10110, while property insurance - not life - must be tested again at the time of loss.
- D) An insurable interest is essential at inception for both types of insurance; payment of the first premium does not waive the requirement.
Memory hook
Check insurable interest at the front door of the policy, not the back.