Idaho Property and Casualty Practice Exam 2026 - Free Practice Questions and Study Guide

The insurance contract is classified as unilateral because only one party, the insurance company, is making a promise to perform an obligation—in this case, to pay for future claims that are covered under the policy. This means that the insurer is bound to fulfill its promise when a covered event occurs, while the insured has not promised to make a payment in exchange for this promise of performance in the same binding manner.

In unilateral contracts, one party's obligations are contingent on the occurrence of a particular event, and the other party does not have a corresponding obligation. The insured pays premiums, and in return, the insurer agrees to provide coverage and pay claims, but the insured does not guarantee any particular action or performance to the insurer apart from the payment of premiums.

While other options might describe different characteristics of contracts (such as bilateral, where both parties exchange promises, or conditional, which pertains to the stipulations under which coverage is provided), they do not accurately capture the unique aspect of insurance contracts where only the insurer bears the responsibility to pay in response to a valid claim. Hence, this delineation solidifies the insurance contract as unilateral.