Under California Insurance Code Section 250, an insurable event is:
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Answer & full 3-part explanation (select an option above, or peek)
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.