General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An insurance policy is a conditional contract. Which statement best illustrates this characteristic?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Conditional means the insurer's obligation is conditioned on the insured meeting certain requirements — paying the premium, giving notice of loss, providing proof of loss, and cooperating with the investigation. If a condition precedent is not met, the insurer may deny the claim or avoid the contract. This conditionality is why insurance is called a conditional contract, and it protects the insurer by keeping the insured accountable.
Why the other options are wrong
- B) Coverage is never unconditional; the insurer's duty depends on compliance with the policy's conditions.
- C) Changing one's mind does not void the contract; policies terminate through lapse, cancellation, or other specified events.
- D) Policy terms are fixed at issue and are not renegotiated claim by claim.
Memory hook
Conditional = 'if you do X, then we pay Y.' Fulfill the conditions and the promise activates.