Even if you have an insurable interest, moral hazard may arise - acting recklessly or other abuse, while knowing you are insured/covered. Somewhat similar to friendly fraud in retail/ecommerce.
Insurance normally has fine print about those things. Life insurance doesn't pay out for suicide. Fire insurance doesn't pay out if you intentionally burn your house down (the fire department also will investigate because even though it is their job they don't like risking their life fighting fires)
You can get insurance without the above provisions, but it will cost a lot more. Once in a while someone manages to collect on a claim for loss of their expensive cigars after they smoke them - but this is rare and usually not worth the cost.
This may vary by country, it isn't a subject I'm particularly familiar with, but at least in the UK that isn't true - many, I think most, life insurance policies here do pay out for suicide. There's just a period of years between the start of the policy and when suicide starts to be covered, to prevent people who are planning on killing themselves from being able to take out insurance just before doing so.
some life insurance policies pay out for suicide after an initial exclusion period. this is often six or twelve months. insurers can include it because suicide claims are relatively uncommon.
if there is evidence that someone took out the policy with the intention of creating a claim then the insurer may treat it as fraud and decline it.
You can get insurance without the above provisions, but it will cost a lot more. Once in a while someone manages to collect on a claim for loss of their expensive cigars after they smoke them - but this is rare and usually not worth the cost.