Legal Definitions - PPI

PPI stands for Policy Proof of Interest.

This term refers to a specific clause sometimes found within an insurance contract, most commonly in marine insurance. A Policy Proof of Interest (PPI) clause states that the insurance policy document itself serves as sufficient evidence that the insured party has a legitimate financial stake, or "insurable interest," in the item or event being insured.

Ordinarily, to successfully make a claim, an insured party must demonstrate that they would suffer a genuine financial loss if the insured item were damaged or lost, or if the insured event occurred. However, with a PPI clause, the insurer agrees to accept the policy document alone as proof of this interest, thereby waiving the need for additional external documentation or legal argument to establish it. While such clauses can simplify the claims process, they can also be controversial because they might be seen as facilitating "wagering" if the insured truly has no genuine insurable interest, which is generally against public policy.

• Example 1: Marine Cargo Insurance

  A shipping company, "Oceanic Logistics," insures a valuable cargo of industrial machinery being transported across the Atlantic. The insurance policy includes a PPI clause. If the cargo is lost at sea due to an unforeseen event, Oceanic Logistics can present the insurance policy as direct evidence of its financial interest in the cargo (e.g., potential freight charges, expected profit from delivery, or even ownership if they purchased the goods for resale). They would not need to provide separate bills of lading, purchase orders, or detailed profit projections to prove their insurable interest in court; the policy itself is accepted as proof.

• Example 2: Art Exhibition Insurance

  An art gallery, "The Renaissance Room," insures a rare historical manuscript on loan for a special exhibition. The policy contains a PPI clause. Should the manuscript be damaged while in the gallery's possession, The Renaissance Room can rely on the insurance policy to establish its financial interest in the artwork (e.g., contractual liability for damage, potential loss of reputation, or obligations to the owner). The gallery would not be required to produce separate loan agreements, appraisal documents, or detailed financial statements to prove its stake; the policy itself confirms it.

• Example 3: Event Cancellation Insurance

  A professional sports league purchases event cancellation insurance to protect against financial losses if a major championship game is called off due to unforeseen circumstances like a natural disaster. The insurance policy includes a PPI clause. If a severe earthquake forces the cancellation of the game, the league can use the policy to demonstrate its financial interest (e.g., lost ticket revenue, unrecoverable stadium preparation costs, or anticipated broadcast rights fees). They would not need to provide extensive financial records or detailed projections of expected income to prove they would suffer a loss; the policy itself serves as the proof of their interest.