Insurance policies are considered what type of contract?

Insurance policies are classified as unilateral contracts because they involve a promise made by one party—in this case, the insurer. The insurer agrees to provide payment for losses covered under the policy, while the insured does not make a corresponding promise but simply pays premium fees in exchange for that coverage. The insurer is obligated to fulfill its promise upon the occurrence of a certain event, such as a loss or claim.

In contrast, bilateral contracts involve mutual exchanges of promises between two parties, where both have obligations to fulfill. Since the core nature of an insurance policy includes the insurer's obligation to pay for covered events without requiring a reciprocal promise from the insured at the time of the agreement, it exemplifies a unilateral contract.

Other types, such as void contracts, are agreements that lack legal validity and cannot be enforced by either party, while incidental contracts refer to agreements that arise from the primary contract but are not essential to its structure. These distinctions further highlight how insurance policies distinctly fall under the category of unilateral contracts.