§22: insurance is a contract to indemnify against loss, damage, or liability from a contingent or unknown event.

§250: a contingent or unknown event may be insured whether past or future (title insurance = unknown past event).

§251: a lottery or its outcome cannot be insured.

Risk = uncertainty about loss.

Pure risk = loss or no loss; this is what insurance covers.

Speculative risk = chance of gain or loss (market value, stocks, gambling); not insurable.

Peril = the cause of loss; hazard = a condition that increases its chance or severity.

Moral = dishonest intent; morale = carelessness because insured.

Physical = condition of the property; legal = courts or laws that raise claim costs.

§533: no liability for a loss caused by the insured's wilful act.

Loss exposure = possibility of loss (before); loss = actual reduction in value (after).

Property exposure = your own property; liability exposure = legal responsibility to others.

Law of large numbers: more similar units, actual results closer to expected. It predicts; it does not prevent.

Four techniques: avoid, reduce, retain, transfer.

Low frequency + high severity = transfer (insurance); small predictable losses = retention.

Deductible = retention: removes small claims, lowers premium, encourages loss prevention. It is not the limit.

Many similar units; accidental; measurable (time, place, dollars); not catastrophic to all at once; affordable premium.

Sentimental value fails 'measurable'; one event hitting nearly everyone fails 'not catastrophic'.

No insurable interest = void contract (§280); a pay-regardless clause is void too (§287).

Property: interest needed when coverage starts AND when the loss occurs (§286).

Mere expectancy (hoping to inherit) is not insurable (§283); amount = extent you could be damnified (§284).

Indemnity: restore, never profit; the limit is a cap.

Underwriting = select and price risks (accept? at what premium?). Claims decides payments.

Adverse selection = the most likely to have losses buy the most.

Spread of risk (Property outline) / risk pooling (Casualty outline): avoid concentration; the many share the losses of the few.

Benefits: loss payments, loss control, securing credit.

Costs: operating expenses, fraud, carelessness (morale hazard).

§620: reinsurance = an insurer insures itself against loss or liability from its original policies.

Purposes: capacity, catastrophe protection, stable results.

§623: the original insured has no interest in the reinsurance contract.

§100 divides insurance into classes; §§101–120 define them.

Casualty is an industry term, not a §100 class.

Sprinkler includes leaking water pipes; mortgage loan default = mortgage guaranty, not surety.

Miscellaneous (§120) is the catch-all class.