Under California Insurance Code Section 250, which statement correctly describes what may be insured against?

Why C is correct

Section 250 broadly permits insurance against any contingent or unknown event — whether past or future — that may damage a person having an insurable interest or create a liability against them, subject to other provisions of the Insurance Code. This is why both property risks and liability risks are insurable. The event must be contingent or unknown; it need not be limited to future occurrences, and it is not restricted to property damage.

Why the other options are wrong

• A) Section 250 explicitly includes past events as insurable; the event need not have already occurred and may be future.
• B) The event must be contingent or unknown, not certain; a certain event lacks the uncertainty insurance requires.
• D) The statute covers events that damage the insured OR create liability against them, so liability events are included.

Memory hook

Insurable events = anything contingent and unknown that can hurt you or make you owe.

Why A is correct

Section 250 provides that any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest, or create a liability against that person, may be insured against. The two pillars of the statute are contingency or uncertainty — as to the fact or the timing of the event — and a genuine insurable interest. This is what separates true insurance from gambling: the insured must stand to lose something of their own. A past event can be covered only if its occurrence is still unknown, such as undiscovered latent damage; a fully documented past loss is a certainty and cannot be insured against.

Why the other options are wrong

• B) Section 250 permits insuring events that are contingent or unknown, which can include certain past events whose occurrence is still uncertain; documented past losses are generally not insurable because they are certain.
• C) There is no one-year limitation in the statute; it speaks of contingency or uncertainty, not a fixed time horizon within which the event must occur.
• D) An insurable interest is expressly required — a person cannot insure against events affecting someone or something in which they have no financial stake.

Memory hook

Section 250: an unknown or contingent event plus an insurable interest equals insurance. Certainty, or no stake, equals no insurance.

Why B is correct

Section 250 provides that, except as otherwise provided in the article, any contingent or unknown event, whether past or future, that may damnify a person having an insurable interest or create liability against that person may be insured against, subject to the provisions of the code. The defining features are contingency or uncertainty and the capacity to produce loss or liability for a person with an insurable interest. Because the event must be contingent or unknown, an event certain to occur does not qualify, and nothing in the statute limits insurable events to those selected by the insurer or to those occurring after issuance.

Why the other options are wrong

• A) An event certain to occur lacks the contingency that Section 250 requires. The statute speaks of contingent or unknown events, so a certain event is not an insurable event. This common misconception is exactly what the governing rule rejects, so the option is incorrect.
• C) The statute defines insurable events objectively by reference to contingency and insurable interest. The insurer does not arbitrarily choose which events qualify. This contradicts the governing rule explained above and therefore cannot be the correct answer.
• D) Section 250 expressly includes past events as well as future events when they remain contingent or unknown, so the event need not occur after the policy is issued. The controlling legal standard set out above demonstrates precisely why this option is incorrect.

Memory hook

Insurable event = uncertain event that can hurt someone with an insurable interest. Past or future, still uncertain.

Why A is correct

Section 250 defines insurable events as those whose occurrence is uncertain and beyond the control of the insured — death, sickness, accident, and similar fortuitous events. This mirrors the insurance definition in Section 22: the event must be contingent or unknown. Events within the insured's control are not insurable because they cannot be treated as random for the purposes of pooling and pricing.

Why the other options are wrong

• B) An event certain to occur on a schedule, like a known obligation, carries no uncertainty and cannot be an insurable event.
• C) An event the insured can trigger at will is not fortuitous; intentional creation of loss is excluded from coverage.
• D) Insurable events concern losses of the insured or covered property, not the insurer's internal operations.

Memory hook

Section 250: uncertain + beyond control. If you can flip the switch yourself, it is not insurable.