General Insurance PrinciplesQuestion 171 of 474
Describing an insurance policy as a contract of adhesion means that:
a.both parties negotiate the wording clause by clause before signing it
b.the policy attaches to the property and passes on to the next owner
c.the insured must adhere to every promise or lose the right to sue
d.one party writes the wording and the other may only accept or reject it
Explanation
The insurer drafts the contract and the applicant adheres to it on a take-it-or-leave-it basis, which is why courts read genuine ambiguity in favor of the insured. The clause-by-clause answer describes a bargained contract, such as a construction agreement, not a policy. A policy also follows the person insured rather than attaching to the property.
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