What does the term 'unilateral' mean in relation to insurance contracts?

The term 'unilateral' in the context of insurance contracts refers specifically to a situation where only one party is obligated to perform a duty under the contract. In insurance, this means that while the insurer is bound to pay claims and provide coverage as specified in the policy, the insured (the individual or entity purchasing the insurance) does not have any obligation to make payments or fulfill other conditions unless certain actions, like paying premiums, are performed.

This framework allows the insurer to set the terms of the contract and obligates them to meet their responsibilities, while the insured's primary responsibility is to pay the premium for the coverage, which does not constitute an obligation to perform other actions that would bind them in a reciprocal manner. Thus, the nature of unilateral contracts emphasizes the one-sided legal obligation of the insurer, which is a defining characteristic of many insurance agreements.