All of the following are characteristics of an insurance contract EXCEPT?

• A. Personal
• B. Private
• C. Conditional
• D. Adhesion

Answer: (B)

Insurance contracts are built around a few defining traits: they are personal, because the policy is between a specific insured and the insurer; they are adhesion-based, drafted by the insurer and accepted as-is by the insured; they are conditional, with coverage triggered only if the stated conditions and terms are met; and they are aleatory, since the actual payment depends on uncertain future events. The term that isn’t considered a standard characteristic is private. While many contracts are private agreements, “private” isn’t a formal characteristic used to describe how insurance contracts work. The other traits—personal, adhesion, conditional, and aleatory—capture the distinctive way insurance contracts are structured and interpreted.