Which term describes a legal agreement between an insurer and the insured?

• A. Insurance policy
• B. Insurance contract
• C. Limits of coverage
• D. Lifetime limit

Answer: (B)

An insurance contract is the legal agreement between the insurer and the insured that creates enforceable rights and duties for both sides. It specifies who is covered, what risks are covered, the premium, how long coverage lasts, what is excluded, and how claims are handled. Because it’s a contract, it can be enforced in court if either party doesn’t meet its terms. The document you may hear called a policy is closely related, but the binding relationship described by the agreement itself is the contract. Limits of coverage and lifetime limits describe how much protection is available, not the binding agreement.