Insurance – How Is It Different From Gambling?
Purchase of gambling chips or placing bets on sporting events. Currency Smuggling. The physical movement of illegal currency or monetary instruments over the border. Currency Exchanges. Purchasing foreign money with illegal funds through foreign currency exchanges. Tom is not required to include anything in gross income because it is a de minimis fringe benefit. Tom is not required to include the $800 in gross income because the use of the course was a gift. Tom is not required to include anything in gross income because this is a 'no-additional-cost service' fringe benefit. Gambling: You cannot insure your chances of losing a gambling game. Loss of profit through competition: You cannot insure your chances of winning or losing in a competition. Launching of new product: A manufacturer launching a new product cannot insure the chances of acceptability of the new product since it has not been market-tested.
Anyone for blackjack? How about a few spins on the roulette wheel? Or how about a bet on your favorite sports team for this weekend’s game? Gambling in moderation, of course, can be a fun pastime which gets the juices flowing and enables banter with friends and colleagues.
How is insurance different from gambling?
Insurance Is Not A Gambling Explained
Think about it. You promise to pay someone (usually an insurance company) some cash (a ‘premium’, payable in installments) related to some ‘event’ which may or may not occur in the future. If that event occurs, you suffer a loss and the insurance company compensates you for that loss. If the event doesn’t occur, the insurance company keeps your cash.
How is this different from placing a bet on the name of a newborn member of the royal family? Or next week’s weather? The difference is that, when buying insurance, there must be the risk of some ‘loss’ – what lawyers call an ‘insurable interest’. That loss can have serious consequences and is something you seriously want to avoid. (No, the heartbreak of seeing your local team lose does not constitute a ‘loss’ for these purposes!)
Your business faces a whole host of risks which can have devastating effects. Understanding and managing those risks is important but achieving the right balance is the goal and can be tricky. Some businesses neglect to buy insurance with catastrophic consequences and others are ‘over-insured’ resulting in waste.
Tips for managing your insurances
You may want to take advice on your approach to insurance and here are some quick tips:
1. Think broadly about your risks: Could your customers experience harm? Or the general public? Or your directors or shareholders? Or your employees or vendors? What about your facilities or assets? You may need insurance as a matter of statutory compliance or because it is required by contract or constitution. You should thoroughly review your needs.
2. Get expert advice: No two businesses have identical insurance needs. Insurance contracts can be complex, and an expert can ensure you are properly protected. Choose your expert wisely since they tend to specialize by industry or by the kind of coverage. A phone conference or appointment with us could be a first step to make sure you are on the right track.
3. Shopping around: There are usually many providers of similar insurance policies, often competing on price. Always consider a selection before deciding and get more than one quote.
4. It’s not only about price: For complex policies, especially in business, there may be specific items you want to insure against. Be diligent about reviewing the entire contract and pay attention to different charges, types and levels of cover, ‘cooling off’ periods and how excesses are calculated.
5. Already have insurance? You can drive prices down by taking a cheaper quote to your existing provider. They may be willing to beat or match your quote immediately or when you need to renew.
6. Consider different ways to buy: You may have an insurance broker or financial advisor who should be proactive in assessing your needs and coverage. Banks might offer this service and there are numerous comparison sites which help you evaluate online insurers. Each channel has advantages and disadvantages, but it is usually best to work with someone who really understands your business and goals.
7. Answer the insurer’s questions accurately: Sounds obvious, but many claims are unsuccessful due to errors or a lack of proper documentation.
Ready to consider your insurance coverage? The starting point is to assess your business goals and the main risks you should protect against. Bressler & Company is uniquely positioned to support you and then ensure you access the right coverage from the best possible providers.
By all means, have an occasional bet when the opportunity arises – but don’t leave your business future to chance!
Call us at 559.924.1225. We’d be happy to help you review your insurance needs and make recommendations for improvement, or take the survey below and we will contact you with the results.
Insurance and gambling were considered alike because there is an uncertainty of events and payment is made when the event occurs.
Like gambling, the insured is unaware of the time and amount of loss.
If the event occurs, the insured like the gambler gains; otherwise, they are experiencing the loss.
Insurance Is Not A Gambling Explaining
But there are certain differences between the insurance contract and gambling.
Nature of risk
In insurance, risks are existing, they may occur at any time.
For example, death, old age, fire, marine perils, accident, etc., may occur at any time.
Related: Risks and Insurance
If there is no insurance;
The person will suffer at the occurrence of these perils, but if insurance is taken against these risks, the ‘usurer will provide a fixed amount or indemnify the amount of loss occurred due to the insured perils.
Thus, insurance is protection against these risks.
Related: Types of Risks in Insurance
In the case of gambling, the risk does not exist, it is being created for a game or amusement white one will suffer and another will gain.
In absence of such game, nobody will suffer. In absent of insurance the property owner will suffer while due to insurance, no party will suffer.
Read more: Pure Risks
Insurable Interest
In an insurance contract, insurable interest is essential.
Without an insurable interest, it would be wagering, contract. Thus, this principle clearly distinguishes the insurance contract from the gambling.
Insurance and Gambling Distinguished
- As an insurance student, it is necessary for us to be able to pinpoint the difference between insurance and wagering. There are:
- Insurance contracts are legally valid contracts, whereas, gaming and wagering contracts are void.
- Utmost good faith is required to be exercised in insurance contracts, whereas, it is not applicable to gaming or wagering.
- In insurance, the insured event may take place or may not, or may take place more than once (except life), but in gaming or wagering the event will definitely take place and it will take place only once.
- The principle of insurable interest applies to insurance contracts but not to wagering.
- Indemnity applies to insurance, but in case of gaming or wagering the person winning gets back his stake and also a windfall gain.
- 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.
- 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.
So it’s clear that insurance is not gambling.