State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under CIC Section 250, the insured event must have the capacity to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 250 requires that the event be one that 'may damnify' the insured — that is, cause financial loss or create liability — and that the insured hold an insurable interest. Both elements tie the event to a genuine loss exposure. Without them, the contract would be a wager, which the law does not recognize as insurance.
Why the other options are wrong
- B) Insurance indemnifies losses; it never guarantees a profit, which would create a wagering contract.
- C) Section 250 places no requirement that the event occur within the first policy year.
- D) The event's source is irrelevant; only its capacity to damage the insured matters.
Memory hook
The event must hurt a real interest — otherwise it is a bet, not a policy.