What characterizes a Contract of Adhesion in insurance?

A Contract of Adhesion in insurance is characterized by the scenario where one party prepares the contract, and the other party accepts it without negotiation. This type of contract is typically created by the insurer, which standardizes the terms and conditions that the insured must accept in their entirety. The insured does not usually have the opportunity to negotiate the individual terms; they can either accept the contract as it stands or decline it entirely.

This structure is important in the insurance industry because it ensures that products are provided quickly and that consumers can easily understand the terms of their coverage. Such contracts are often presented in a take-it-or-leave-it manner, emphasizing the imbalance in bargaining power between insurers and insureds. Thus, if there's any ambiguity or unclear terms in the contract, courts generally favor the insured, as they did not have a hand in drafting the document.

The other options do not accurately describe a Contract of Adhesion. Involving both parties in drafting and negotiating contract terms does not align with the concept of adhesion, which minimizes the insured's ability to influence the contract. Third-party reviews before acceptance are not a defining feature of adhesion contracts either. Lastly, while clear terms are essential in any contract, the characteristic of adherence lies in the lack of negotiation rather than