Asked by: Bernard Willecke
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What is an insurance adhesion contract?

Last Updated: 21st April, 2020

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An example of an adhesion contract is an insurance contract. In an insurance contract, the company and its agent has the power to draft the contract, while the potential policyholder only has the right of refusal; they cannot counter the offer or create a new contract to which the insurer can agree.

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Considering this, why is a policy considered to be a contract of adhesion?

In the insurance world, a contract of adhesion – also known as an adhesion contract – is a contract where one party has significantly more power than the other when creating the contract. You can't look over your insurance policy and then counter the offer with more favorable terms.

Also, is a lease a contract of adhesion? Insurance contracts and residential leases are other kinds of adhesion contracts. This does not mean, however, that all adhesion contracts are valid. Many adhesion contracts are UNCONSCIONABLE; they are so unfair to the weaker party that a court will refuse to enforce them.

Then, what does contract of adhesion mean?

An adhesion contract (also called a "standard form contract" or a "boilerplate contract") is a contract drafted by one party (usually a business with stronger bargaining power) and signed by another party (usually one with weaker bargaining power, usually a consumer in need of goods or services).

What is adhesion doctrine?

A contract of adhesion refers to a contract drafted by one party in a position of power, leaving the weaker party to “take it or leave it.” Adhesion contracts are generally created by businesses providing goods or services in which the customer must either sign the boilerplate contract or seek services elsewhere.

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