If Mr Olu insures Mr Obi's house, the insurer may, in event of a loss, refuse to pay compensation based on the principle of

The insurer may refuse to pay compensation in the event of a loss if Mr. Olu insures Mr. Obi's house and there is no insurable interest. The principle of insurable interest requires that an insurance policyholder must have an interest in the property that is being insured. This means that the policyholder must stand to lose something of value if the insured property is damaged or destroyed. In the case of Mr. Olu insuring Mr. Obi's house, Mr. Olu would need to have a valid reason for insuring the property, such as owning the house himself or having a financial interest in the property, in order for the insurance policy to be valid. If there is no insurable interest, the insurer may refuse to pay compensation, as the insurance policy would be considered invalid.