Under California Insurance Code Section 250, an "insurable event" is best described as:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Section 250 defines an insurable event as an event whose occurrence or non-occurrence is contingent, meaning it is uncertain and outside the control of either party. This contingency is what makes the insurance obligation meaningful: the insurer pays only if a future event that cannot be controlled actually happens. If an event were certain, or deliberately caused by the insured, the contract would lack the element of uncertainty that insurance requires. Insurable events are therefore the foundation of the risk transfer that defines the insurance contract under California law.
Why the other options are wrong
- A) A certain event cannot be the basis of insurance because there is no uncertainty or risk to measure and price. Certainty removes the very element insurance transfers. If the event were guaranteed to happen, there would be no uncertainty to price, and the transfer of risk would be meaningless.
- B) Merely wishing for an event does not create an insurable event. The event must be contingent and must have financial significance to the insured. A wish is not a contingency; the event must be genuinely uncertain and capable of causing financial loss.
- C) Events intentionally caused by the insured are generally excluded because they are not fortuitous. Intentional causation creates a moral hazard and defeats the purpose of insurance. Deliberate causation removes fortuity and signals moral hazard, so such events cannot qualify as insurable events.
Memory hook
Section 250: insurable events are coin flips beyond your control. No control, no certainty, no coverage.