Which type of insurance contract involves obligations on one party only?

A unilateral contract is characterized by the obligation of only one party to fulfill a promise or duty. In the context of insurance, the insurer is the party that makes a promise to pay for covered claims, while the insured does not have a corresponding obligation to pay for coverage, although they typically pay premiums. The essence of a unilateral contract lies in its one-sided nature, where one party's performance (the insurer's promise to provide coverage) is dependent on the other party's actions (the insured's payment of premiums). This type of contract adequately describes most insurance agreements, where the insurer's commitment to pay claims constitutes the unilateral obligation.

In contrast, a bilateral contract entails mutual obligations, where both parties make promises to each other—this is not primarily how insurance contracts function. Conditional contracts require certain conditions to be met for the contract to be enforceable; while insurance policies often include conditions, the defining feature of a unilateral contract is the nature of obligation. Lastly, adhesion contracts are drafted by one party, with the other party having little to no ability to negotiate terms; while many insurance policies could be categorized this way, it does not explicitly define the obligation nature found in unilateral contracts. Therefore, the aspect of a single-party obligation is what identifies the correct