State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Under California Insurance Code Section 22, insurance is defined as a contract in which one party agrees to indemnify another against loss, damage, or liability arising from what kind of event?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 22 defines insurance as a contract whereby one party agrees to indemnify another against loss, damage, or liability arising from a contingent or unknown event. 'Contingent' means dependent on an uncertain occurrence, and 'unknown' means the outcome cannot be foreseen. This uncertainty is what makes the risk insurable: the loss must be possible but not certain. The statutory definition is the foundation for every insurance contract sold in California, including accident and health policies.
Why the other options are wrong
- B) A guaranteed future event leaves no uncertainty to insure; insurance exists only where the timing or occurrence of a loss is unknown.
- C) Deliberately self-inflicted injuries are excluded by public policy and are not insurable events under the definition.
- D) Insurance is not an investment vehicle; guaranteeing investment results is not part of the statutory definition of insurance.
Memory hook
Insurance bets on a maybe, never a certainty. Contingent = unsure, unknown = unpredictable.