In an insurance contract, the insurer is the only party legally obligated to perform. Because of this, an insurance contract is considered
The Correct Answer Is:
- D) unilateral
When someone buys insurance, they are legally obligated to the insurer. This is due to the fact that the insurer is the only party in the contract who is legally obligated to perform. This means that an insurance contract is considered unilateral and not bilateral. Unilateral contracts are often disadvantageous for both parties because it creates a lack of trust. The buyer cannot be sure that the insurer will be able to fulfill its promise and this can lead to distrust and possibly a lawsuit.