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.
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