In the U.S., California has, by statute, created one of the clearest definitions of insurance. The California Insurance Code states:

Insurance is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.

The California Legislature, by Insurance Code Section 22, merely codified three centuries of common law defining insurance. This definition should apply in most states. Whether codified, or only part of the state's common law, there can only be insurance if there is an agreement to indemnify against a contingent or unknown event. 

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.