A, purchased a flat of ₹ 25.00 lakh, taking a loan of ₹ 20.00 lakh from a bank and balance of ₹ 5.00 lakh was paid out of his past savings. Bank obtained an Insurance policy of ₹ 25.00 lakh from an Insurance Company. The

In this case, the banker provides a loan or mortgage secured by the property or asset, they then have an insurable interest in that property or asset. If a borrower is provided with a loan to purchase a property, the bank will have an equivalent insurable interest in that property as was equal to the loan. It will decrease over time as the loan is paid back until it reaches zero, at which time the lender will no longer have an insurable interest in the property. In the present case, the Bank only has an insurable interest in this property to the extent of ₹ 20.00 lacs only, which is the amount of the loan provided. The insurance policy was taken for ₹ 25.00 lakh, but the bank's insurable interest is limited to the outstanding loan amount. Therefore, the bank is eligible to receive a claim amount of ₹ 20.00 lakh from the insurance company, which represents its insurable interest in the destroyed property.