A matter of some interest

What is the difference between insurance and gambling? Historically, the legal answer was that the insured must have an insurable interest in the subject matter of the insurance whereas the gambler can bet on just about anything so long as bookmaker and odds are available. The distinction was important since contracts of wager were unenforceable by reason of s 18 of the Gambling Act 1845 and insurance effected by an insured without such an interest was a contract of wager. Like so much of English Law, its piecemeal development by a patchwork of statute (principally the Life Assurance Act 1774 (LAA 1774) and the Marine Insurance Act 1906) and case law has meant that the result is uneven and to some extent illogical. In particular, although generalisation is difficult and imprecise:

• in indemnity insurance—where recovery is measured by the existence and extent of the insured’s actual loss, the rule