Insurance is a Contract That Can Only Be Entered Into Freely

Insurance Contract By Compulsion from the State Is Not Enforceable

Health Insurance and Religion

Opinion by Barry Zalma

Zalma on Insurance in Top 50

Government health insurance programs like the 2200 page law euphemistically called “Obamacare” or the program for the elderly called Medicare have no resemblance to true insurance. Both require people to buy the so-called “insurance” and pay for it with tax dollars rather than all of the cost being paid by those insured.

In the real world “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 Section 22] Insurance, to exist, requires a contract freely entered into by two parties, neither under compulsion to enter or not enter into the contract. The insurer, for the payment of a premium from the person to be insured, agrees to indemnify the insured against certain clearly identified risks of loss chosen by both. The insurer expects to profit from the premium collected and the insured expects to be indemnified for the risks of loss identified in the policy agreed to at the time the contract was agreed.

As I listen to politicians and clergy argue over rulings by the Secretary of Health and Human Services requiring religious organizations to provide “insurance” for procedures that are anathema to the religious beliefs of followers of the Roman Catholic Church, many Protestant denominations and Muslim organizations I  wonder if anyone in the U.S. Government knows what insurance is and that insurance is not a right guaranteed by the U.S. Constitution whose terms and conditions could be mandated by the Secretary of Health and Human Services.

In a free society everyone has the right to enter or refuse to enter into a contract free of compulsion.  If the force of the United States government requires a person to buy a contract of insurance that provides coverages not required — like a 90-year-old woman or a nun who took a vow of celibacy coverage for pregnancy — or a 20-year-old man to buy coverage for Viagra it is compelling a contract under the compulsion of fine or jail.

In 1904 the U.S. Supreme Court found in NORTHERN SECURITIES COMPANY v. UNITED STATES, 24 S. Ct. 436, 193 U.S. 197 (U.S. 03/14/1904) the court concluded that “‘Liberty,’ as used in the Fifth Amendment to the Constitution means not merely bodily liberty — freedom from physical duress, but in effect comprehends substantially all those personal and civil rights of the citizen which it is meant to place beyond the power of the general government to destroy or impair.”  The Supreme Court found that it follows that, as used in the Fifth Constitutional Amendment, “liberty” includes equality of rights under the law and secures citizens similarly situated against discriminations between them which are arbitrary and without foundation in reason. United States v. Cruikshank, 92 U.S. 542, 554; Yick v. Hopkins, 118 U.S. 356, 369; Gulf, Colorado & Santa Fe Ry. Co. v. Ellis, 165 U.S. 150, 160. By denying people equality of rights and discriminating between them in the matter of their property rights, arbitrarily and without reason by stopping them from selling their property I believe that ordering someone to buy insurance is the same as a government stopping someone from selling his property.

The U. S. Supreme Court also found in Gibbons v. United States, 8 Wall. 269, in which an army contractor who had agreed to furnish certain oats at a fixed price had, after the delivery of part of the amount, been released from the obligation to deliver the balance. He was, however, carried before the military authority, and influenced by threats, agreed to deliver, and did deliver, the full quantity of oats specified in the contract. He brought suit for the difference between the contract price and the market price of the oats at the time of delivery. It was said that “if such pressure was brought to bear upon him as would make the renewal of the contract void, as being obtained by duress, then there was no contract, and the proceeding was a tort for which the officer may have been personally liable.”

A contract made by a party under compulsion is void because consent is of the essence of a  contract, and where there is compulsion, there is no voluntary consent. “A contract made by a party, under compulsion, is void; because consent is of the essence of a contract, and where there is compulsion, there is no consent, for this must be voluntary. Such a contract is void for another reason. It is founded in wrong or fraud. It is not, however, all compulsion which has this effect; it must amount to duress. But this duress may be either actual violence, or threat. [Doctor’s Associates, Inc. v. Casarotto, 517 U. S. 681, 687 (1996);DUNCAN v. HENSLEY, 248 Ark. 1083, 455 S.W.2d 113 (Ark. 06/15/1970); The Elfrieda, 19 S. Ct. 146, 172 U.S. 186, 43 L. Ed. 413, 1898.SCT.40283; McCracken v. McCracken, 2009 Ark.App. 758 (Ark.App. 11/11/2009)]

I am fearful of a government that can compel me to enter into a contract I do not wish to enter. If they can compel me to buy a health insurance coverage I neither want nor need for a price I do not want to pay it can compel me to enter into a contract of marriage with a woman I do not know or to buy an automobile I do not want or need, or to buy a house where I do not want to live, or to have adopt children after I am too old to care for them, or to limit my family to one child.

As I listen to the talking heads and politicians speak I was reminded of a poem by Friedrich Gustav Emil Martin Niemöller (14 January 1892 – 6 March 1984) who was a Protestant pastor and social activist. He wrote about his time in Germany during World War II:

When the Nazis came for the communists, I did not speak out;
 As I was not a communist.

When they locked up the social democrats, I did not speak out;
I was not a social democrat.

When they came for the trade unionists, I did not speak out;
As I was not a trade unionist.

When the came for the Catholics, I did not speak out;
As I was not a Catholic.

When they came for the Jews, I did not speak out;
As I was not a Jew.

When they came for me,
there was no one left to speak out.

As a Jew who has different religious imperatives than a member of the Roman Catholic Church, I will not fall into the trap that Pastor Friedrich Gustav Emil Martin Niemöller fell into. I am, by this post, speaking out that the United States Government should not, under the First, Fifth and Fourteenth Amendment to the U.S. Constitution be allowed to compel anyone to buy any type of contract — whether called “insurance” or something else — because to do so is an improper compulsion making the contract voidable.

As I have said many times insurance is a contract between a person who, for a premium, agrees to indemnify another (the insured) against certain enumerated risks of contingent or unknown losses. When a government compels the content of the contract it is no longer a contract between two but a contract where one is compelled against his pecuniary interest to buy insurance protection he neither wants nor needs. It is, by a weight of authority, voidable.

To compel a Catholic priest or nun to be insured for contraception, pregnancy or abortion when they have taken an oath of celibacy is wasteful, a contract unneeded by religious fiat, and an attempt to prevent them exercising their right to practice their religion as they see fit in violation of the First Amendment to the U.S. Constitution.

When representatives of the government say the order of HHS is to protect the health of women like cloistered nuns is a fraud on its face. HHS should stop telling people what insurance coverages they must buy and spend more time prosecuting those health care providers who are stealing from the public treasury billions of dollars by billing for services not rendered.

Barry Zalma, Esq., CFE

© 2012 – Barry Zalma

Barry Zalma, Esq., CFE, is a California attorney, insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud. Mr. Zalma serves as a consultant and expert, almost equally, for insurers and policyholders.

He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant. He recently published the e-books, “Zalma on Diminution in Value Damages – 2012,”“Zalma on Insurance,” “Heads I Win, Tails You Lose — 2011,” “Zalma on Rescission in California,” “Arson for Profit,” “Insurance Fraud,” and others that are available at

Mr. Zalma can also be seen on World Risk and Insurance News’ web based television program “Who Got Caught” with copies available at his website at


About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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