Under an insurance contract, what is the term for what both the insured and insurer give up?

The term that refers to what both the insured and the insurer give up in an insurance contract is consideration. Consideration represents the value exchanged between the parties involved; for instance, the insured pays a premium, which is the financial commitment made to obtain coverage, while the insurer provides the promise to cover specific risks as outlined in the policy. This mutual exchange is crucial because, without consideration, there would be no binding contract.

Understanding consideration is essential as it highlights the reciprocal nature of insurance agreements. It emphasizes that both parties must provide something of value for the contract to be effective. The other terms listed, such as premium, deductible, and coverage, are important components of an insurance policy but do not represent the mutual sacrifice or value exchanged in a binding agreement, which is central to the concept of consideration.