General Insurance PrinciplesQuestion 172 of 474
An insured pays $1,400 of premium and later collects $90,000 after a fire. This unequal exchange of value shows that the policy is:
a.executed, because both duties are fully performed
b.unilateral, because only the insurer makes a promise
c.conditional, because duties depend on conditions met
d.aleatory, because the amounts exchanged depend on chance
Explanation
An aleatory contract is one in which the dollars each side gives up may be wildly unequal and depend on an uncertain event. The unilateral and conditional answers are true statements about a policy, but they describe who is legally bound and what must be done first, not the lopsided exchange in the question. A policy is executory, not executed, because the insurer's duty lies in the future.
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