What makes an insurance contract different from other types of contracts?

An insurance contract is distinctive because it operates on the principle of adhesion. This principle means that one party (the insurer) drafts the terms of the contract, while the other party (the insured) has limited ability to negotiate the terms. Essentially, the insured must "adhere" to the terms as written. This creates a situation where the insurer has provided the form on which the agreement is based, leading to a certain level of imbalance in bargaining power.

This characteristic is foundational in insurance contracts, emphasizing the necessity for clarity in the language and a fair understanding for the insured regarding what is covered and what is not. Courts also tend to interpret any ambiguities in favor of the insured due to this principle.

Although it is true that some insurance contracts are executed in writing, not all contracts in general require a written form to be valid. Furthermore, the involvement of a third party typically pertains to liability insurance and does not apply universally to all types of insurance contracts. Lastly, while mutual acceptance is a key element of all contracts, the defining characteristic of insurance contracts lies specifically in the principle of adhesion, which sets them apart from other contract types.