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

The main difference between a contract and an insurance policy is the type of promise that is being made. A contract is a legally binding agreement between two or more parties that creates an obligation to do or not do something. This could be an agreement between two people to exchange goods or services, or a landlord and tenant agreement. An insurance policy, on the other hand, is a contract between an insurance company and a policyholder, which promises to cover certain losses or liabilities in exchange for premium payments. In a contract, both parties are obligated to fulfill certain requirements and any failure to do so can result in legal action. An insurance policy is more like a promise by the insurance company to pay out benefits if a covered loss or liability occurs. Although the policyholder must still pay premiums, they are not held responsible for fulfilling any requirements under the policy. In Maryland, insurance law requires that all insurance policies contain certain uniform provisions in order to be valid in the state. This includes language that makes it clear that the policyholder is the beneficiary of the insurance contract, and that the insurance company is bound to pay out benefits if a loss or liability occurs as stated in the policy.

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