All contracts must have an agreement. This means one party makes an offer and the other party accepts the offer.
For instance, if Julio offers to buy Juan’s car for $7,000 and Juan accepts the offer, it is considered an agreement.
In an insurance contract:
- The offer is made by the customer when he or she fills out the insurance application.
- The acceptance is made by the insurance company when its authorized representative agrees to provide an insurance policy to the customer.