Insurance contracts are considered contracts of what type?

Insurance contracts are considered contracts of adhesion because one party (the insurer) drafts the terms and conditions of the contract, and the other party (the insured) has little to no ability to negotiate the terms. This creates a "take-it-or-leave-it" scenario where the insured must accept the contract as it is presented.

In these contracts, the language is typically written in a way that is designed to be clear and understandable, as the onus is on the insurer to ensure that the terms are sufficiently visible and understandable. If there is any ambiguity in the terms of the contract, courts generally interpret the contract in favor of the insured, due to the nature of adhesion.

This characteristic distinguishes insurance contracts from other types of agreements, underscoring the importance of clear communication and transparency in insurance practices. The understanding of insurance contracts as contracts of adhesion plays a significant role in principles of consumer protection within the insurance industry.