Legal Purpose

What Does Legal Purpose Mean?

Legal purpose is an insurance principle according to which insurance contracts that insure something illegal or involves illegal conditions are not valid. For example, a liability insurance policy for a bank robbery company would not be valid. None of the claims filed would be legally enforceable.

Insuranceopedia Explains Legal Purpose

Legal purpose ensures that insurance companies do not end up insuring criminal activities. Without it, the crime rate could increase due to reduced financial risk.