State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which of the following is NOT part of the definition of insurance under California Insurance Code Section 22?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Section 22 defines insurance as a contract to indemnify another against loss, damage, or liability arising from a contingent or unknown event. The essential elements are indemnity, a contingent or unknown event, and loss, damage, or liability flowing from that event. A profit guarantee is foreign to the definition: insurance restores or indemnifies, but it never creates gain for the insured. Including a profit guarantee would turn the contract into a speculative or investment vehicle rather than insurance, which is why it is the one item that is not part of the statutory definition.
Why the other options are wrong
- A) Indemnity against loss is the central element of the Section 22 definition; an agreement to restore the insured financially after a loss is exactly what insurance does.
- B) A contingent or unknown event is expressly required by Section 22; without uncertainty about whether the event will occur there is no insurable risk to price.
- D) The loss, damage, or liability must arise from the insured event; this causal element is part of the definition, not something that is excluded from it.
Memory hook
Insurance makes you whole again; it never promises you a profit.