General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
An insurance policy is governed by contract law. Which statement correctly distinguishes contract law from tort law?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Contract law governs voluntary obligations created by an agreement — offer, acceptance, consideration, competent parties, and legal purpose. Tort law governs duties imposed by society regardless of any agreement — negligence, defamation, battery — and provides remedies for harm. An insurance policy is a contract, so coverage disputes are analyzed under contract principles, whereas a driver's negligent accident that causes injury is analyzed as a tort.
Why the other options are wrong
- B) Both bodies of law can apply to oral and written situations; oral contracts are generally enforceable, and torts can arise from oral conduct.
- C) Contract law requires consideration — an exchange of value; tort law does not, because its duty exists by law rather than by bargain.
- D) Both bodies of law cover a wide range of harm; torts include property and personal injury, and contracts can concern any lawful subject.
Memory hook
Contract = duties you VOLUNTEER for. Tort = duties you are BORN with — do not harm others.