The correct answer is: A. Insurance Co. has all the bargaining power.
An adhesion contract is a contract in which one party, the offeror, has substantially all the bargaining power and the other party, the offeree, has little or no opportunity to negotiate the terms of the contract. In the case of an insurance contract, the insurance company is the offeror and the insured is the offeree. The insurance company has all the bargaining power because it has access to information about the risks that it is insuring against, and the insured does not. The insured is therefore in a weak position to negotiate the terms of the contract.
The following are some of the reasons why insurance contracts are adhesion contracts:
- The insurance company has access to information about the risks that it is insuring against, and the insured does not.
- The insured is in a weak position to negotiate the terms of the contract.
- The insurance company has a standard form contract that it uses for all of its customers.
- The insured is usually not able to negotiate any changes to the terms of the contract.
- The insured is usually not able to get a copy of the contract before signing it.
Adhesion contracts are often criticized because they are unfair to the offeree. The offeree does not have an opportunity to negotiate the terms of the contract, and the contract is usually written in a way that is favorable to the offeror.
Insurance contracts are a type of adhesion contract because the insurance company has all the bargaining power. The insurance company has access to information about the risks that it is insuring against, and the insured does not. The insured is therefore in a weak position to negotiate the terms of the contract.