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We covered the legal characteristics of insurance contracts. Some of these characteristics are: unilateral contracts, aleatory contracts, contracts of adhesion, and personal contracts. Which one of these characteristic is illustrated by each of the following?

1. Hamburger Heaven (HH), was forced to close its six restaurants during the covid pandemic. The owner of HH, Vicky Murray, filed a claim with her insurer to recover lost business income. The insurer denied the claim, noting the policy did not cover losses attributable to sickness. Vicky sued the insurer, arguing the term sickness was not defined in the policy. The judge who heard the case agreed with Vicky. In her ruling, the judge said, If the insurer doesnt want to cover claims arising from a pandemic, its contract should clearly indicate that.

2. Chuck purchased a one-year homeowners policy. He was short of funds at the time of purchase. He paid one-fourth of premium when he purchased the coverage, and said he would make three additional quarterly premium payments; three months, six months, and nine months after the coverage went into effect. If his insurer does not abide by the terms of the contract, Chuck can sue the insurer and demand performance. The insurer, however, cannot sue Chuck if he fails to pay the future premiums. They can cancel coverage according to the terms of the contract, but they cannot sue Chuck if he does not pay the premium.

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