What defines a contract of adhesion?

A contract of adhesion is characterized primarily by the fact that its terms are not negotiable. In such contracts, one party—typically the insurance company—creates the terms and conditions, which the other party, the insured, must accept without any opportunity for modifications. This creates an imbalance of power, as the insured has little input or ability to negotiate the terms.

The definition aligns closely with common definitions found in legal contexts, where a contract of adhesion is understood as a standard-form contract drafted by one party and presented to the other on a take-it-or-leave-it basis. This reinforces the non-negotiable nature of such contracts, placing the insured in a position where they must agree to all terms as stipulated if they wish to obtain the insurance coverage. Therefore, this option accurately captures the essence of what defines a contract of adhesion.