Ethics and Insurance

Ethics and Good Faith is the Basis of Insurance

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Posted on October 6, 2023 by Barry Zalma

Insurance is a contractual relationship between an insurer and a person described as the insured or assured.

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. [California Insurance Code § 22]

The California Legislature, by Insurance Code Section 22, merely codified three centuries of common law defining insurance. This definition applies in most states. Whether codified, or only part of the state’s common law, there can only be insurance if there is an agreement by one to indemnify against a contingent or unknown event.