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

A contract and an insurance policy are both legally binding agreements. However, they differ in how they provide protection in the event of a loss. A contract is an agreement between two parties which dictates that a service will be provided for a specified price. In the event that one of the parties fails to fulfill their obligations, the other may sue for damages. An insurance policy, on the other hand, is an agreement between an individual (the insured) and an insurance company. The insurance company promises to pay the insured for losses they experience due to events covered by the policy. For example, if they experience a loss due to an accident, the insurance company would pay for the damages. Depending on the type of policy, the company may also cover legal fees and medical bills. In Iowa, it is important to understand the differences between contracts and insurance policies. While contracts provide protection from certain losses, insurance policies provide financial protection in the event of an unforeseen loss. If an individual is unfamiliar with insurance policies, they should contact an Iowa-licensed insurance broker or attorney to get the advice they need.

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

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