What does it mean for insurance contracts to be unilateral?

Insurance contracts are deemed unilateral because they involve a legally enforceable promise made by one party, which is typically the insurer. In these contracts, the insurer promises to pay a specified benefit upon the occurrence of a covered event, such as the policyholder's death or a significant loss. The policyholder, on the other hand, does not have a corresponding obligation to perform; their primary role is to pay premiums. Thus, the promise from the insurer is the only enforceable obligation in the agreement.

This concept is fundamental in understanding the nature of insurance contracts, as it highlights that the contract's enforceability primarily rests on the insurer's commitments. Unilateral contracts differ from bilateral contracts, where both parties have obligations to fulfill, which is not the case in insurance agreements. In a bilateral contract, both parties negotiate and promise to perform specific duties, creating reciprocal relationships, which is not applicable in the context of standard insurance policies.