State RegulationsFL specificDifficulty 1/5
Under Florida insurance law, what is an insurance contract?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under the Florida Insurance Code (Chapter 624, Florida Statutes), an insurance contract is an agreement in which the insurer agrees to indemnify the insured or pay a specified benefit upon the occurrence of a contingent event, such as death, sickness, or accident, in exchange for premium. The transfer of risk for a premium is the essence of insurance.
Why the other options are wrong
- B) A goods sale with a money-back guarantee involves no transfer of contingent risk to an insurer for premium.
- C) A profit-sharing investment arrangement shares investment results rather than indemnifying a contingent loss.
- D) A lease transfers the use of property, not the risk of a contingent event such as death or sickness.
Memory hook
Insurance = risk transferred for premium, paid on a contingency.