Under California law, insurance is best defined as a contract whereby one party undertakes to:
a.Pool savings of many persons and return the savings on demand
b.Pay a fixed annuity for the life of the insured regardless of any loss
c.Indemnify another against loss, damage, or liability arising from a contingent or unknown event
d.Guarantee a financial profit to another party when an event occurs
Explanation
California Insurance Code §22 defines insurance as a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event. Insurance is about indemnification for a contingent loss, not guaranteeing profit, paying annuities, or pooling savings.
Law Reference: Cal. Ins. Code §22This topic, taught in full in the California Property & Casualty Broker-Agent guide. California Property & Casualty Broker-Agent Study Guide — 2026 Edition — PDF + EPUB, $24.99 · 14-day refund →
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