Major Differences between Contract of Insurance and Wagering

Major Differences between Contract of Insurance and Wagering

Today many people think that insurance wagering is the same. They are never the same and will not be, but for any item to exist, there must be some element of the relationship between that item and another, but if the differences thereof are more than the similarities one can make a categorical statement that they are not the same.

On this note, insurance should be differentiated from wagering or gambling [bet] contract which has been made illegal and in most cases a criminal offense because of their illegality. But it would be incomplete and unrealistic to point out that there are no similarities between bulk-makers and insurers.

Insurance

is a safeguard against risks. It is the last hope of the insured against the occurrence of the risk, he inturns enjoy a premium with respect to the contract agreement ab initio. Let’s look at the point below.

a. A contract of insurance is a contract to make good the loss of property (or life) of another person against some consideration called the premium.

b. In a contract of insurance, the insured must have an insurable interest. Without an insurable interest, it will be a wagering agreement.

c. In a contract of insurance both parties are interested in the protection of the subject matter, i.e., there is a mutuality of interest.

d. Except for life insurance, a contract of insurance is a contract of indemnity, i.e. a contract to make good the loss.

e. Contracts of insurance are based on a scientific and actuarial calculation of risks.

f.  In a contract of insurance, the insured must have an insurable interest. Without insurable interest, it will be a wagering agreement.

g. In a contract of insurance both parties are interested in the protection of the subject matter, i.e., there is a mutuality of interest.

Wagering

this is more profit-oriented the parties to this contract created it with the motive of enriching themselves with bountiful profit. In some countries of the world, wagering is considered illegal and it has zero insurable interest.

Two important similarities between insurance and wagering contract

1, both the bookmaker [waggery] and Insurance calculates the possibilities of a certain event occurring and will prepare a certain rate at which they will be arranged to absorb the risk. In a wagering contract what is paid is odds, but to insurance companies, what is paid is premium, but the most important thing is that they are all payments

2. Both of them reduce personal losses or heavy risks. In line with this both the insurance companies and bookmakers [wagery] want to incur or reduce individual losses, hence both of them seek different ways of minimizing the risk. Insurance companies do this by ensuring, while a bookmaker does it by laying off.

 

5 major differences between insurance and a waggery.

1. an Insurance contract is legally enforceable in the law court while a wagering contract has no legal backups

2. Insurance requires insurable interest while a wagering contract or gambling has no insurable interest.

3. Insurance in most cases is encouraged by the state and some of them are even made compulsory, but gambling is not made compulsory.

4. Insurance companies are not anxious about making money, but wagerers do.

5. In insurance one is immune from losses. that if the assured and particular risk or losses, they will settle the claim. But in gambling, the player or the bookmaker is not immune since he may gain or lose.

Also

6. A wagering agreement is an agreement to pay money or money’s worth on the happening of an uncertain event.

7. No insurable interest is necessary in the case of a Wagering agreement.

8. In a wagering agreement there is a conflict of interest and in reality, there is no interest at all to protect.

9. In the case of a wagering agreement, there is no question of indemnity. On the happening of the event fixed amount becomes payable.

10. Wagering agreements are not based on such calculations and are in the nature of gambling

conclusion

from the explanation above one may likely deduce that insurance is not the same as wagering or gambling; though to some extent share some similarities.

Thanks, do well to hit the comment section for your contribution