Why can an insurance company only be held liable for breach in a unilateral contract?

In a unilateral contract, only one party makes a promise or takes on an obligation, while the other party does not have any obligations. This means that only the insurer in a typical insurance policy, which is a unilateral contract, is held liable for any breach. The insurance company promises to provide coverage or benefits in exchange for the policyholder’s payment of premiums. Since the policyholder is not bound to perform any action beyond paying the premium, any breach of the contract by the insurer directly affects the only party with an obligation.

Thus, the liability of the insurance company in a unilateral contract is tied to its promise. If the insurer fails to fulfill that promise (for example, by not paying a covered claim), it is responsible for that breach, whereas the policyholder’s role is mainly to pay premiums and does not involve a reciprocal obligation under the contract. This distinction is crucial in understanding why the insurance company alone can be held liable in these situations.