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Principles of Risk Management and Insurance, 13th Edition by Michael McNamara, George E. Rejda

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Distinct Legal Characteristics of Insurance Contracts

Insurance contracts have distinct legal characteristics that make them different from other legal contracts. Several distinctive legal characteristics have already been discussed. As we noted earlier, most property and casualty insurance contracts are contracts of indemnity; all insurance contracts must be supported by an insurable interest; and insurance contracts are based on utmost good faith. Other distinct legal characteristics include the following:

  • Aleatory contract

  • Unilateral contract

  • Conditional contract

  • Personal contract

  • Contract of adhesion

Aleatory Contract

An insurance contract is aleatory rather than commutative. An aleatory contract is a contract where the values exchanged may ...

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