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

An insurance policy and a contract are two different types of legal documents. An insurance policy is an agreement between an insurance company and an individual or organization in which the individual or organization pays a premium in exchange for protection from financial losses due to accidents, illness, or other events. The insurance company agrees to cover any costs or losses up to a certain amount as detailed in the policy. A contract is an agreement between two or more parties that creates a legal obligation. It binds the parties involved to do something, such as exchange goods or services, keep certain promises, or perform other stated obligations. Like an insurance policy, a contract outlines the details of the agreement and any associated costs, but it is more general than an insurance policy in that it outlines an agreement between two parties without limiting the amount of any potential losses or costs.

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

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