Difference between Contract of Insurance and Wagering Agreement

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Contract of Insurance

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

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

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

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

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

Wagering Agreement

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

2. No insurable interest is necessary in case of a wagering agreement.

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

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

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

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