In property and casualty insurance, when must insurable interest exist?

In property and casualty insurance, insurable interest must exist at the inception of the policy. This principle ensures that the insured has a legitimate stake or financial interest in the property or subject matter being insured. The rationale behind this requirement is to prevent moral hazard, where an individual might intentionally cause a loss if they don't stand to suffer a financial blow from the event. By requiring insurable interest at the start of the policy, insurers ensure that the policyholder is genuinely concerned about protecting the asset, thus aligning incentives and maintaining the integrity of the insurance system.

In the context of the other options, it's important to note that while insurable interest must be present when the policy begins, having it only at the time of loss, or merely when a claim is filed, would not provide the necessary legal foundation for enforcing the insurance contract. Additionally, requiring insurable interest at the time of policy renewal would introduce ambiguity into the ongoing relationship between the insurer and insured, which the insurance system seeks to avoid.