A contract is a legally binding agreement between two or more parties and from this contract will flow the personal rights as well as equivalent obligations of the parties. We can also refer to “a certain performance in exchange for a certain consideration.” Of essence in any contract is the principle of agreement. Without agreement there is no contract.

A contract of insurance is a synonym for an insurance policy. In the case of an insurance contract one party agrees to indemnify the other party for loss that take place—if the loss is covered under the terms of the contract.

In the case of a car insurance policy the contract will specify the item, the car, being insured as well as a list or the actual risks covered in the contract such as theft, fire, and third party liability. It will also list the exclusion of items or events that are not under cover, the amount of the insurance, the monthly premiums payable—where and when.

The contract will also contain the various conditions applicable to both parties as well as what benefits will be payable in case of a loss or damage. An insurance contract must be in writing and signed by both parties.