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Simple English definitions for legal terms
wager policy
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A quick definition of wager policy:
An insurance policy is a contract between you and an insurance company. It's a document that explains what the insurance company will cover if something bad happens to you or your property. There are many different types of insurance policies, like ones that cover accidents, property damage, or even life insurance. Insurance companies use a process called rating to decide how much you should pay for your policy, which is called a premium. It's important to read and understand your insurance policy so you know what you're covered for and what you're not.A more thorough explanation:
A wager policy is an insurance policy issued to a person who has no insurable interest in the person or property covered by the policy. This means that the person has no financial stake in the outcome of the policy. Wager policies are illegal in most states because they encourage gambling and fraud.
For example, if someone takes out a life insurance policy on a stranger, they have no insurable interest in that person's life. If the person dies, the policyholder would receive a payout, which is essentially a bet on the person's death. This is illegal and considered a wager policy.