Legal Purpose
Updated: 03 January 2025
What Does Legal Purpose Mean?
The principle of legal purpose in insurance states that contracts insuring illegal activities or involving unlawful conditions are invalid. For instance, a liability insurance policy for a company engaged in bank robbery would be void, and any claims filed under such a policy would not be legally enforceable.
Insuranceopedia Explains Legal Purpose
Legal purpose ensures that insurance companies do not provide coverage for criminal activities. Without this requirement, the crime rate could rise due to the reduced financial risk associated with criminal behavior.
