What is a key characteristic of unilateral contracts in insurance?

In insurance, unilateral contracts are defined by the fact that only one party makes a legally enforceable promise. In the context of an insurance policy, the insurer (the insurance company) promises to pay for covered losses or provide benefits, while the insured (the policyholder) does not make any reciprocal promise that is enforceable. Instead, the insured agrees to pay premiums, but failure to do so does not result in a legally enforceable obligation for the insurer to fulfill their promise until the premium is paid.

This characteristic underscores the nature of most insurance agreements, where the insurer is bound to perform under the contract as long as the premiums are paid, placing the primary obligation on the insurer. This one-sidedness is what distinguishes unilateral contracts from bilateral contracts, where both parties are bound by enforceable promises. The essence of a unilateral contract in insurance emphasizes the promise made by the insurer, which is a key component of understanding how insurance policies function and the responsibilities of each party involved.