What distinguishes a unilateral contract in insurance?

In the context of insurance, a unilateral contract is characterized by the fact that only one party, typically the insurer, is legally bound to perform their obligations under the contract. In this scenario, the insurer promises to pay a specified amount or provide certain benefits in exchange for the premiums paid by the policyholder. The policyholder, while they may pay premiums and hold certain rights, does not have a reciprocal obligation to the insurer. Therefore, the essence of a unilateral contract is that the insurer's promise is enforceable, while the insured has a conditional responsibility that hinges on their actions, such as making premium payments.

This understanding reflects the distinct nature of insurance contracts compared to bilateral contracts, where both parties have mutual obligations. In an insurance contract, the promise made by the insurer stands alone, making it a unilateral agreement.