What is a characteristic of insurance contracts where only one party makes a promise to perform?

• A. Bilateral
• B. Multilateral
• C. Unilateral
• D. Reciprocal

Answer: (C)

Insurance contracts are typically characterized as unilateral, meaning that only one party—the insurer—makes a promise to perform. In these contracts, the insurer promises to provide coverage or a benefit in exchange for the payment of premiums by the policyholder. The policyholder's side of the contract does not involve a reciprocal promise to pay benefits; rather, they fulfill their obligation by paying the premiums.

This one-sided promise is what distinguishes unilateral contracts from bilateral contracts, where both parties engage in mutual promises. In the context of insurance, the insurer is obligated to pay for covered losses, while the insured's obligation is limited to the payment of premiums.

Understanding this characteristic is important for grasping how obligations are structured in insurance, providing clarity on the parties' responsibilities and expectations.