This article presents the first law and economics perspective on the topic of insurance law as a whole. In doing so it provides both an overview of insurance law as well as a discussion on the major themes of the economic analysis of insurance law and its leading cases. The paper also presents a theoretical framework — the two islands functional approach — that can help solve insurance law puzzles. Ultimately, this paper could help any insurance law judge, lawyer, or student as well as any legislature to correctly conceptualize and solve the legal problems facing courts and insurance lawyers alike.