What should be the basis of an insurance contract validity?

The correct basis for the validity of an insurance contract is the presence of an insurable interest. Insurable interest refers to a financial or emotional stake in the subject of the insurance policy, which ensures that the policyholder has a legitimate reason to seek coverage. This principle is crucial because it prevents moral hazard, where individuals might otherwise take out insurance on items or people they do not care about, potentially leading to unethical behavior or abuse of the insurance system.

In the context of insurance contracts, having an insurable interest means that the policyholder would suffer a financial loss if the insured event occurs, thus establishing a legitimate risk. Without this foundational requirement, the contract could be deemed void, as it disrupts the contractual purpose, which is to provide financial protection against loss.

The other options, while relevant to aspects of insurance, do not establish the fundamental basis of validity in the same way. Consent of the involved parties is necessary for any contract but does not specifically address the unique nature of insurance contracts. Random selection of beneficiaries undermines the core principle of insurable interest by introducing arbitrary elements, similarly to a signed statement of risk, which may document terms but does not inherently validate the contract without the presence of an insurable interest.