Ace the CII Insurance Law (M05) Challenge 2025 – Unlock Your Future in Insurance!

An employer's liability insurance policy is classified as a bilateral contract because it involves mutual obligations between both parties – the insurer and the insured. In this type of contract, the insurer promises to provide coverage and pay benefits in exchange for the insured's payment of premiums. The agreement is characterized by each party's commitment: the insurer has the duty to indemnify the insured for losses covered by the policy, while the insured must pay the agreed insurance premiums.

In contrast, unilateral contracts involve one party making a promise in exchange for an act from another party, but there is no corresponding obligation for the second party to act. Oral contracts are based on verbal agreements rather than written agreements, and their enforceability can be subject to interpretation. Implied contracts arise from the actions or circumstances of the parties, not expressly stated terms. Each of these other contract types lacks the mutuality of obligations that defines a bilateral contract.