INSURANCE AND WAGER :

A contract of Insurance, i.e. life, accident, fire, marine, etc. is not a wager though it is performable upon an uncertain event. It is so because; the principle of insurable interest distinguishes insurance from a wagering contract. Insurable interest is the interest which one has in the safety or preservation of the subject matter of insurance. Where insurable interest is not present in insurance contracts, it becomes a wagering contract and is therefore void.

The following are the points of distinction between wagering agreements and insurance contracts.

1. The parties have no insurable interest iii a wagering agreement. But the holder of an insurance policy must have an insurable interest.

2. In wagering agreement, neither party has any interest in happening or non-happening of an event. But in a contract of insurance, both parties are interested in the subject-matter.

3. Contracts of insurance are contracts of indemnity except life insurance contract, which is a contingent contract. But a wagering agreement is a conditional contract.

4. Contract of insurance are based on scientific and actuarial calculation of risks, where as wagering agreements are a gamble without any scientific calculation of risk.

5. Contracts of insurance are regarded as beneficial to the public and hence encouraged by the State but wagering agreements serve no useful purpose.

6. A contract of insurance is a valid contract where as a wagering agreement is void being expressly declared by law.