Which contract is defined by a standard form created by the insurer?

Which contract is defined by a standard form created by the insurer?

• A. Personal Contract
• B. Contract of Adhesion
• C. Ambiguities
• D. Warranty

Answer: (B)

A contract of adhesion is defined by a standard form created by the insurer and presented to the insured on a take-it-or-leave-it basis. The insured typically cannot negotiate the terms, so the policy language is largely set by the insurer. This one-sided offer is common in property and casualty insurance, which is why the form is described as an adhesion contract. When terms are unclear, they are usually interpreted in the insured’s favor because the insured did not have an opportunity to rewrite the form. The other concepts don’t describe how the contract is created: a personal contract refers to the relationship between parties rather than how the policy is formed, ambiguities relate to unclear language within the contract, and a warranty is a guaranteed condition within the contract rather than the contract’s origin.

A contract of adhesion is defined by a standard form created by the insurer and presented to the insured on a take-it-or-leave-it basis. The insured typically cannot negotiate the terms, so the policy language is largely set by the insurer. This one-sided offer is common in property and casualty insurance, which is why the form is described as an adhesion contract. When terms are unclear, they are usually interpreted in the insured’s favor because the insured did not have an opportunity to rewrite the form. The other concepts don’t describe how the contract is created: a personal contract refers to the relationship between parties rather than how the policy is formed, ambiguities relate to unclear language within the contract, and a warranty is a guaranteed condition within the contract rather than the contract’s origin.