Some people, including insurance adjusters, forget an insurance policy is a legally binding contract.  Claim representatives who adjust a lot of liability and third-party claims sometimes tend to confuse the issue of coverage under a policy with liability for the accident.  These issues are not related.

One reason insurance policies don’t seem like binding contracts is because the insurance policy is signed with a preprinted signature by an officer of the company. The policy holder or insured does not have to sign the agreement so it is not what people typically think of as a contract.

Another reason maybe that insurance policies are contracts the courts call “contracts of adhesion”. In other words, the terms of the agreement are usually not negotiated like a typical business deal. The insurance company drafts and prepares the policy and the insured either buys the coverage or does not.

Regardless of whether people think of insurance polices as contracts, courts consider them valid and binding to the extent the agreement does not violate regulations of the insurance department, statutes of the jurisdiction where the policy is issued, and controlling case law interpreting insurance policies. As such, the first step in trying to decide whether there is coverage for any given situation is to read the policy.