A. No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss.

B. "Insurable interest" as used in this section means any actual, lawful and substantial economic interest in the safety and preservation of the subject of the insurance free from loss, destruction, pecuniary damage or impairment.

History: Laws 1984, ch. 127, § 336.

Test of insurable interest. — Any person has an insurable interest in property, by the existence of which he will gain an advantage, or by the destruction of which he will suffer a loss, whether he has or has not any title in, or lien upon, or possession of the property itself. Teague-Strebeck Motors, Inc. v. Chrysler Ins. Co., 1999-NMCA-109, 127 N.M. 603, 985 P.2d 1183, cert. denied, 127 N.M. 391, 981 P.2d 1209, overruled in part by Sloan v. State Farm Mut. Auto. Ins. Co., 2004-NMSC-004, 135 N.M. 106, 85 P.3d 230.

Contingent interests. — Even though a purchase agreement for an automobile dealership that was destroyed by fire was subject to approval by the bankruptcy court, the purchaser had an insurable interest in the property if the agreement would in fact have been approved by the court had there been no fire. Teague-Strebeck Motors, Inc. v. Chrysler Ins. Co., 1999-NMCA-109, 127 N.M. 603, 985 P.2d 1183, cert. denied, 127 N.M. 391, 981 P.2d 1209, overruled in part by Sloan v. State Farm Mut. Auto. Ins. Co., 2004-NMSC-004, 135 N.M. 106, 85 P.3d 230 .

Mobile home. — Insureds, who had an oral contract to purchase a mobile home and were co-obligors on a note secured by the mobile home in which they were residing when it was destroyed by fire, had an insurable interest in the mobile home. Suggs v. State Farm Fire & Cas. Co., 833 F.2d 883 (10th Cir. 1987), cert. denied, 486 U.S. 1007, 108 S. Ct. 1732, 100 L. Ed. 2d 196 (1988).

Law reviews. — For annual survey of New Mexico insurance law, 19 N.M.L. Rev. 717 (1990).

Am. Jur. 2d, A.L.R. and C.J.S. references. — Automobile fire, theft, and collision insurance: Insurable interest in stolen motor vehicle, 38 A.L.R.4th 538.

Fire insurance: insurable interest of one expecting to inherit property or take by will, 52 A.L.R.4th 1273.

Insurable interest in property of lessee with option to purchase property, 74 A.L.R.4th 883.