In an insurance contract where the insurer is the only party making a legally enforceable promise, what kind of contract is this?

In the context of insurance contracts, a unilateral contract is defined by the characteristic that only one party—the insurer—makes a legally enforceable promise. This means that the insurer agrees to provide coverage or pay benefits, contingent upon certain conditions being met, primarily the policyholder paying the premium.

In a unilateral contract, the insurance company relies on the premiums paid to uphold its promise, but the policyholder is not required to fulfill a reciprocal obligation; they simply pay the premium in exchange for the promise of coverage. The value lies in the insurance company's commitment to offer protection, regardless of the policyholder's future actions.

Understanding the implications of a unilateral contract is crucial for grasping how insurance works. The insurer holds the responsibility to honor the terms of the contract, such as providing coverage when a valid claim is made, but the policyholder’s obligations, like premium payments, do not create a reciprocal promise; hence, they are not bound to perform in every situation. This is distinct from bilateral contracts, where both parties have mutual obligations.