What is considered a contract in the insurance industry?

In the insurance industry, a contract is defined as an agreement creating obligations between parties. This is correct because a contract establishes legal relationships and duties among the involved parties—typically, the insurer and the insured. It includes specific terms that outline the coverage, premium payments, conditions, and responsibilities, thereby forming the foundation of the insurance agreement.

A promise made by a client, while it may reflect an intention or commitment, does not itself constitute a contractual relationship because it lacks the mutual obligations and terms necessary for a contract. Similarly, a verbal agreement for services may serve as a preliminary discussion but often fails to include the comprehensive details and formalities required for a legally binding contract, especially in the insurance context where written documentation is typically mandated. Finally, a summary of policy exclusions provides information regarding what is not covered under a policy but does not encapsulate the entirety of obligations, terms, and agreements necessary for a valid contract. This highlights the importance of a comprehensive agreement in establishing mutual responsibilities and expectations.