Insurance and gambling seem to be same in some extent.Insurance is often erroneously confused with gambling. But actually there isgreat difference in nature and function between them. The basic differenceamong them can be summarized as given below:
1.Exacting risk and creation of risk: insurance isa technique for handling an already existing pure risk. For example, we pay $10 an insurer for auto insurance; the risk of vehicle accident is alreadypresent and is transferred to the insurer by a contract. No new risk is made bythe transaction. But gambling creates a new speculative risk. For example, webet $50 on football game, anew speculative risk is created.
2.Interest in the prevention of a loss: Insuranceand the insured both have a common neither the insurance not the insurer isplace in apposition where the gain of the winner comes at the expense of theloser. But gambling is socially unproductive, because the winner’s gain comesat the budgets of the loser.
  • 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.
  • BBC World Service journalist Tim Harford wisely states, “Legally and culturally, there is a clear distinction between gambling and insurance. Economically the difference is less visible.
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3.Minimizing uncertainty and increasinguncertainty: insurance helps to minimize the uncertainty and risks in thesociety, hence it promotes industrialization and economic development. Incontrast, gambling increases uncertainty, risks and conflict in the society. Itdoes not promote industrialization. Rather than it increases people’s will toearn money by speculation or luck, not by honest activities of labor. Hencegambling increases bad people and social crime.

The new car insurance laws allow drivers to choose between PIP limits of $50,000 (if enrolled in medicaid), $250,000, $500,000, or to opt-out if they meet certain eligibility rules. The reforms also made it so insurance companies cannot rate on a variety of non-driving factors such as: ZIP code, credit score, educational level, home ownership. Fundamentally the difference between insurance and gambling is the existence of exposure and thus an insurable interest. Whilst a parametric solution executed as derivative could technically result in a positive basis risk (ie. Payout without an actual financial loss sustained), most risk transfer solutions in the corporate world are written as. (i) For insurance, loss might never occur while for gambling, the bet must happen in order to determine winner or loser. (ii) Insurance involves pure risks while gambling involves speculative risks. (iii) Regular premiums are paid for insurance while for gambling payment is done once.

10 Difference Between Insurance And Gambling Losses

4.Restore: Generally, insurance contract restore the insured financially incompletely of partially if a loss occurs. In contrast, consistent gamblingtransactions generally never restore the losers to their former financialposition.

10 Difference Between Insurance And Gambling Companies

5.Prevention of loss:Insurer and the insured bothhave a common interest in the prevention of a loss. Both parties win if theloss doses not occur. But in case of gambling one can win only if the secondparty loses financially.