California Property & Casualty Broker-AgentGeneral InsuranceMedium
Which of the following is a characteristic of a contract of adhesion in insurance?
- AThe insured must accept the contract as written by the insurer.
- BThe contract is negotiated equally between the insurer and the insured.
- CThe contract can be modified unilaterally by either party without mutual consent.
- DAmbiguities in the contract are typically interpreted in favor of the insurer.
Show answer & explanationAnswer & explanation
Correct answer: A. The insured must accept the contract as written by the insurer.
A contract of adhesion is one prepared by one party (the insurer) and accepted or rejected by the other (the insured) without negotiation. The insured must 'adhere' to the terms as presented.
Why the other options are wrong
- B. This describes a contract of negotiation, not adhesion.
- C. Contracts generally require mutual consent for modification; unilateral modification is not a characteristic of adhesion.
- D. Ambiguities are typically interpreted in favor of the insured, not the insurer, in contracts of adhesion.
Contract of Adhesion
An insurance contract where one party (the insurer) drafts the terms, and the other party (the insured) must accept or reject them without negotiation.
- Prepared by the insurer.
- Insured has no power to negotiate terms.
- Ambiguities are usually resolved in favor of the insured.
Memory trick: Insurance contracts have special traits, making them unique in legal debates.