In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

a. Unilateral

b. Unidirectional

c. Aleatory

d. Conditional

Answer: Unilateral contract.

Explanation:

A unilateral contract is a contract in which promise to fulfill a requirement is made only in one direction, when only the offeror makes a promise and the offeree is on the receiving end of the promise. In insurance the insurer is the only one who makes a promise while the insured is the one receiving the offer (and can break from the agreement at any time). The insurer is the offeror while the insured is the offeree.