If insurance is about managing risk and gambling is about taking risk, then is there some way that these two things are connected?
Insurance is the collective intent to protect group members from exposure to the risk of loss through accident, theft, illness, or death. Insurance and Gambling Distinguished As an insurance student, it is necessary for us to be able to pinpoint the difference between insurance and wagering.
But they do not work the same way as insurance risk groups.
But if insurance is about managing risk, some people ask, how is that any different from gambling? In purchasing insurance, the insurer faces an already existing risk of economic loss. Someone comes out ahead and someone comes out behind. Insurance collects payments against replacing, repairing, or recovering property that an owner is unwilling to lose.
Thus, this principle clearly distinguishes the insurance contract from the gambling. Without an insurable interest, it would be wagering, contract.
Indemnity applies to insurance, but in case of gaming or wagering the person winning gets back his stake and also a windfall gain. The entire group of insureds provides through the premiums paid, the funds which make possible the payment of all claims; Essence is whatever one person wins from a wager is lost by the other wagering party.
The Simple Explanation Gambling intentionally puts up a stake that the gambler is willing to lose. Tends to equalize fortune.
So it sounds like there is risk involved in both insurance and gambling. Purchase of insurance does not create a new and non-existing risk of loss to the purchaser.
You may be able to win it back later but if you stop gambling after you lose your stake then you have lost your stake for good. What one insured gains is not at the expense of another insured. In this way they all worked together for their mutual success. An insurance event is never desired by either of the parties, but parties to gaming and wagering would always like to win at the cost of the other.
In an insurance contractinsurable interest is essential.
Nature of risk
Some people keep gambling until they have nothing left to gamble. Insurance is like a limited tax that is collected for the good of the group of insured people. There are always winners and losers in gambling. Through insurance premiums we hope to collect enough money in advance to be able to replace, repair, or recover all of the lost or damaged property after the storm.
Insurance contracts are legally valid contracts, whereas, gaming and wagering contracts are void. An insurance plan collects money from a group of people who face a similar risk of loss.