Insurance contracts are primarily classified as what type of contract?

Insurance contracts are primarily classified as unilateral contracts because a unilateral contract involves a promise made by one party in exchange for an act or performance by another party. In insurance, the insurance company makes a promise to pay a benefit upon the occurrence of a specified event, such as the death of the insured or a covered loss. The insured's obligation is typically to pay the premium, but they do not have a reciprocal promise to perform any action under the terms of the contract.

In a unilateral contract, only one party is bound to fulfill their promise, which is a distinguishing feature of insurance contracts. The insurer is obligated to pay claims if the event occurs, while the insured must simply pay premiums to maintain the policy but is not required to take any further action.

This classification is essential in understanding the legal framework within which insurance operates, as it affects how claims are handled, how policies are enforced, and the obligations of both parties involved in the insurance contract.