Michigan Property & Casualty Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

In a Contract of Adhesion, the terms are typically presented on a "take it or leave it" basis. This means that one party, usually the insurance company or another large entity, drafts the contract, and the other party, usually the consumer, has little to no ability to negotiate the terms. The consumer simply agrees to the contract as it is presented, which can lead to an imbalance in bargaining power.

Contracts of Adhesion are often used in situations where one party, due to their position, has the ability to dictate the terms while the other party must either accept those terms or forgo the benefits of the contract altogether. In the context of insurance, this structure ensures that contracts are standardized, making them easier to understand and administer, but it also raises concerns about fairness and whether the consumer fully comprehends all the stipulations involved.

Whereas the other choices imply a level of negotiation or understanding that is not characteristic of Contracts of Adhesion, the defining feature of these agreements is their non-negotiable nature.