State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
Under the statutory definition of insurance in California, the insurer's obligation to indemnify may cover:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC Section 22 states that insurance is a contract to indemnify another against 'loss, damage, or liability arising from a contingent or unknown event.' The statutory scope therefore covers three categories: direct loss, physical or financial damage, and legal liability. Each must still stem from a contingent or unknown event, which preserves the fortuity requirement at the heart of insurance.
Why the other options are wrong
- B) Section 22 expressly includes liability, so indemnification is not limited to property damage.
- C) Past, fully documented events lack the required contingency; only contingent or unknown events are insurable.
- D) Intentional losses are excluded from the definition because they are not contingent or unknown and are not fortuitous.
Memory hook
Indemnify against loss, damage, or liability — three doors, all locked by a contingent or unknown event.