What is the difference between a contract and an insurance policy?

A contract and an insurance policy are both legal documents, however, they serve different purposes. A contract is an agreement between two or more parties, usually in exchange for something of value. Generally, a contract outlines the rights and duties of each party and specifies the terms of the agreement between them. In order for a contract to be valid, all parties must agree to the same terms and sign off on it. An insurance policy, on the other hand, is a contract in which one party, the insurer, agrees to cover the financial losses of another party (the insured) in exchange for payment of a premium, within certain limits. An insurance policy provides protection against specific risks that are stated in the policy. It outlines the terms of the agreement, such as the types of losses covered, the amount of coverage, and the limits of coverage. In addition, it includes details on how to make a claim and what the responsibilities of the insured are when making one. In summary, a contract is a general agreement between two or more parties and an insurance policy is an agreement between an insurer and an insured that covers specific risks in exchange for a premium.

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