What type of insurance contract requires performance from both parties?

A bilateral contract is a type of insurance contract that requires performance from both parties involved. In this context, one party (the insurer) agrees to provide coverage as specified in the policy, while the other party (the insured) agrees to pay premiums and abide by the terms of the contract. This mutual exchange of promises is what distinguishes bilateral contracts from unilateral contracts, where only one party is obligated to perform, such as in the case of an insurance company paying a claim once a specific event occurs.

Understanding this concept is crucial for those working in the insurance field, as it establishes the framework for the obligations that both the insurer and the insured must fulfill. It highlights the importance of fulfilling these responsibilities to maintain a valid and enforceable insurance agreement.