A contract of insurance is considered an aleatory contract. Insurance contracts are aleatory because the insurance company and the insured are exchanging unequal values. As an example, the insurance company is providing coverage for $1,000,000 but will charge you a premium less than the coverage amount. Additionally, insurance contracts are unilateral. The reason an insurance contract is unilateral is because only one side is making a legally enforceable promise. The insured simply agrees to pay a premium. Failure to pay the premium will result in the policy being canceled. However, the insurance company is making multiple promises in protecting an insured under a covered loss. They will defend and indemnify the insured up to the policy limits.
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