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In insurance contracts, what does the term 'adhesion' refer to?
Multiple authors deciding terms of the contract
Only the insurer creates the terms of the contract
The insured writing their terms and the insurer agreeing
Both parties negotiating and compiling contract terms
The correct answer is: Only the insurer creates the terms of the contract
In insurance contracts, the term 'adhesion' refers to a situation where only one party, typically the insurer, creates the terms of the contract. This means that the insured has little to no ability to negotiate the terms and must accept the contract as it is presented. This characteristic emphasizes the unbalanced nature of the agreement, where the insurer holds most of the power regarding the contract, and the insured is seen as adhering to those terms without negotiation. The concept of adhesion assures that consumers might be in a disadvantageous position when it comes to understanding the terms, reinforcing the necessity for clarity and transparency from the insurer. This is pivotal in the insurance industry, where consumers must fully comprehend the contract they enter, often without the ability to modify the stipulations laid out by the insurer.