Difference Between Insurance and Gambling

Insurance and gambling were considered alike because there are uncertainty of events and payment is made when the event occurs.

Like gambles 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. But there are certain differences between the insurance contract and gambling.

1. 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 any time.

If there is no insurance, the person will suffer at the occurrence of these perils, but if insurance is taken against these risks, the insurer will provide a fixed amount or indemnify the amount of loss occurred due to the insured perils.

Thus, insurance is protection against these risks.

In case of gambling, the risk does not exist, it is being created for game or amusement while one will suffer and another will gain. In the absence of such a game, nobody will suffer. In absence of insurance the property owner will suffer while due to insurance, no party will suffer.

2. Insurable Interest

In insurance contract, insurable interest is essential.

Without insurable interest, it would be wagering contract. Thus, this principle clearly distinguishes the insurance contract from the gambling.