Question 2003 of 303 · California Life-Only Agent Exam

An insurance policy is a contract of adhesion because

Exactly one answer is correct.

Aboth parties negotiate every provision of the contract before they sign
Bthe insurer writes the terms and the applicant accepts them
Cthe policy sticks to the insured's property until the loss is paid
Dthe applicant must obtain court approval before signing the contract

Show solution

Correct answer to question 2003

B: the insurer writes the terms and the applicant accepts them

Explanation

In an adhesion contract one party drafts all terms. Courts therefore interpret ambiguities against the insurer.