In the context of insurance, what does the term "adhesion" refer to?

In the context of insurance, the term "adhesion" refers to a contract that the insured must take as is. This principle highlights the unilateral nature of insurance contracts, where the insurer typically drafts the terms without an opportunity for negotiation by the insured. As a result, the policy is presented to the insured on a take-it-or-leave-it basis. This characteristic is significant because it places the insured in a position where they have limited power to alter the contract's terms, reinforcing the need for regulatory oversight to ensure that the contracts are fair and transparent.

Understanding "adhesion" is critical in recognizing the legal implications it carries. For example, if there is ambiguity in policy language, courts often interpret such terms in favor of the insured, as they did not have a hand in drafting the agreement. This principle promotes a level of protection for consumers, ensuring they are not taken advantage of due to the insurer's bargaining power. This is distinct from scenarios where negotiation occurs, where both parties have the opportunity to contribute to the final terms of the contract.