Insurance Contract Versus Wagering or Gambling Contract

Is a contract of insurance a wagering or gambling contract?

NO.  A contract of insurance is a contract of indemnity and not a wagering or gambling contract.  Although it is true that an insurance contract is also based on a contingency, it is not a contract of chance.

What is the concept of a lottery?

The term “lottery” extends to all schemes for the distribution of prizes by chance, such as policy playing, gift exhibition, prize concerts, raffles at fairs, etc. and various forms of gambling.

What are the three essential elements of lottery?

Consideration, prizes and chance.

There is consideration of price aid if it appears that the prizes offered by whatever name they may be called came out of the fund raised by the sale of chances among the participants in order to win the prizes.

Are all prizes equivalent to a lottery?

If the prizes do not come out of the fund or contributions by the participants, no consideration has been paid and consequent, there is no lottery. Ex: A company, to promote the sale of certain products, resorts to a scheme which envisions the giving away for free of certain prizes for the purchase of said products, for the participants are not required to pay more than the usual price o the products.

Can a sweepstakes holder insure himself against the failure of his ticket to win?

NO. It cannot be said that he suffered a “loss” of prize when he did not win.  The failure to win a prize would not damnify or create a liability against him.