General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
In an insurance contract, the insured's consideration consists of:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Consideration is what each party gives up to bind the contract. The insured gives the premium and the statements in the application — both are bargained-for value. The insurer gives its promise to pay covered claims. Without consideration on both sides, there is no enforceable contract. The agent's commission is paid by the insurer and is not the insured's consideration.
Why the other options are wrong
- B) The insured does not promise to refrain from claiming; the right to claim is the very benefit purchased.
- C) The insurer's promise to pay is the insurer's consideration, not the insured's.
- D) The agent's commission is a compensation arrangement between the agent and insurer and forms no part of the insured's consideration.
Memory hook
Consideration = the price of the promise. You give premium plus application truth; the insurer gives its word to pay.