Nature of risk
In either case, one party may receive more, much more, than he paid or agreed to pay. 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 principle of insurable interest applies to insurance contracts but not to wagering. Read more from Answers Everyday Post navigation.
Insurance collects payments against replacing, repairing, or recovering property that an owner is unwilling to lose. How Does Gambling Differ from Insurance?
Distinctions and Similarities Between an Insurance Contract and a Wagering Contract
Purchase of insurance does not create a new and non-existing risk of loss to the purchaser. In insurance, it is known as to which party is immune from loss, but in gaming or wagering it is not known which party is going to win or lose.
In this way they all worked together for their mutual success.
So we can say that insurance seeks to minimize risk by maintaining or restoring the financial difference between gambling and insurance quo whereas gambling seeks to maximize risk with the intention of changing the status quo. Insurance and Gambling Distinguished As an insurance student, it is necessary for us to be able to pinpoint the difference between insurance and wagering.
The ancient Roman writer Tacitus described the Germanic tribes who lived to the north of the empire as loving gambling so much that when their men had lost everything else they would gamble themselves into difference between gambling and insurance in the hope of winning back their lost fortunes.
In other words, gambling plunges into risk and potential loss in the hope of gaining something whereas insurance seeks to avoid or minimize loss because there is no gain to be had from risking the loss. Law on Insurance Distinctions between an insurance contract and a wagering contract A contract of insurance is a contract of indemnity and not a wagering, or gambling contract.
They are similar in only one respect. What is the real difference?
Insurance is like a limited tax that is collected for the good of the group of insured people. What one insured gains is not at the expense of another insured. Insurance Contract Parties seek to distribute loss by reason of mischance Parties contemplate gain through mere chance or the occurrence of a contingent event. Leaders gave assurance of their good will and peaceful intentions to each other in the ancient world, often by giving up hostages to each other.