Insurance is an Option

Property insurance is a put option on an asset at its replacement cost. The option is exercisable only if an accidental event occurs that changes the value of the asset. Certain accidental events are excluded.  

Liability insurance is a call option on a tortuous liability at zero. This option is exercisable only if the event is not deliberate.

Both options have a one year expiry after issuance, i.e. are one year options.

Within this option framework, insurers use option theory, and specifically option game theory, in pricing the insurance product, as all capital market option traders do.