<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>SilasX</author><text>I think I would refine that a bit as, insurance [1] involves payout on an event the insured &lt;i&gt;doesn&amp;#x27;t&lt;/i&gt; want to happen [even given the payout], while a gamble is where the insured &lt;i&gt;does&lt;/i&gt; want it to happen [because of the payout].&lt;p&gt;This matches the historical and in-practice role of the insurer: they try to keep you from overinsuring things, or insuring things you don&amp;#x27;t have an interest in preventing from happening (&amp;quot;insurable interest&amp;quot;).  Both of these create a so-called &amp;quot;moral hazard&amp;quot;, the same category that make gambling bad, and vastly increases the fraud they have to deal with.&lt;p&gt;[1] or rather &amp;quot;the kinds of risk transfer we want to allow&amp;quot; vs those we don&amp;#x27;t</text><parent_chain><item><author>mikeash</author><text>I&amp;#x27;d say the fundamental difference is that gambling sometimes provides a huge payout after a small loss, whereas insurance provides a payout roughly equal to the loss.&lt;p&gt;Insurance isn&amp;#x27;t supposed to have big paydays, it&amp;#x27;s just supposed to make you whole. Your house insurance might pay out a million dollars, but only if that&amp;#x27;s what it actually costs to rebuild your house.&lt;p&gt;It&amp;#x27;s telling that when insurance starts to get away from this model, like people insuring stuff for far more than it&amp;#x27;s worth, or taking out life insurance policies on strangers, both the law and morality start to frown it.</text></item><item><author>MR4D</author><text>Article gives a good background, but doesn&amp;#x27;t clearly answer it&amp;#x27;s own question. The simple answer (although not followed as closely as it should be in regulation):&lt;p&gt;Gambling involves the creation of risk where none previously existed, while insurance is solely about the transfer of risk from one party to another (or more than one).</text></item></parent_chain></comment><story><title>What makes gambling wrong but insurance right?</title><url>http://www.bbc.com/news/business-38905963</url></story>
<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>massysett</author><text>Life insurance can have huge paydays. The size of the payout is tied only to the premiums paid, not to the size of the loss.</text><parent_chain><item><author>mikeash</author><text>I&amp;#x27;d say the fundamental difference is that gambling sometimes provides a huge payout after a small loss, whereas insurance provides a payout roughly equal to the loss.&lt;p&gt;Insurance isn&amp;#x27;t supposed to have big paydays, it&amp;#x27;s just supposed to make you whole. Your house insurance might pay out a million dollars, but only if that&amp;#x27;s what it actually costs to rebuild your house.&lt;p&gt;It&amp;#x27;s telling that when insurance starts to get away from this model, like people insuring stuff for far more than it&amp;#x27;s worth, or taking out life insurance policies on strangers, both the law and morality start to frown it.</text></item><item><author>MR4D</author><text>Article gives a good background, but doesn&amp;#x27;t clearly answer it&amp;#x27;s own question. The simple answer (although not followed as closely as it should be in regulation):&lt;p&gt;Gambling involves the creation of risk where none previously existed, while insurance is solely about the transfer of risk from one party to another (or more than one).</text></item></parent_chain></comment><story><title>What makes gambling wrong but insurance right?</title><url>http://www.bbc.com/news/business-38905963</url></story>