Why Are Insurance Contracts Said to Be Contracts of Adhesion

question 8

Multiple Choice

Why are insurance contracts said to be contracts of adhesion?

• A)The values exchanged by the parties to the contract are not equal.
• B)One party writes the contract,and the other party must accept the entire contract as written.
• C)Only one party makes a legally enforceable promise.
• D)Conditions are placed on the insurer's promise to perform.

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Definitions:

Owner's Capital

The amount of equity a business owner has invested in the business minus any withdrawals made from the business by the owner.

Cash Balance

The amount of cash a company has available, reflecting the total amount of cash and cash equivalents at a given point in time.

General Ledger

A full catalog of all economic activities a company has engaged in from its inception, systematically arranged by accounts.

Cash Account

An account that records all cash transactions, including receipts and payments, reflecting the company's liquidity status.