Under California Insurance Code Section 250, which event may be insured against?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC Section 250 provides that, except as otherwise provided, any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest, or create a liability against that person, may be insured against. Two requirements stand out: the event must be contingent or unknown, meaning fortuitous, and the person must have an insurable interest that the event would harm. This is why insurance contracts require uncertainty at inception and why wagering on outcomes the policyholder has no stake in does not qualify as an insurable event.
Why the other options are wrong
- B) An event certain to occur at a fixed time is not contingent or unknown, so it lacks the fortuity that insurance requires.
- C) Section 250 expressly allows past events to be insured when they remain unknown or contingent; the event does not have to be fully documented first.
- D) Section 250 does not limit insurable events to voluntary acts; losses from perils such as fire, wind, and illness all qualify.
Memory hook
Section 250: if it is a maybe and it hurts you, you can insure it, but only if you have a stake in the hurt.