Which definition fits the term 'Unilateral Contract'?

The term 'Unilateral Contract' is best defined by the statement indicating that the insurer must pay if a loss occurs, but the policyholder has no obligation to file a claim. In a unilateral contract, only one party, in this case, the insurer, is bound to perform their obligations, which is to pay out in the event of a covered loss. The policyholder does not have an obligation to take action, such as filing a claim, but rather has the option to do so if they choose.

This characteristic distinguishes unilateral contracts from bilateral contracts, where both parties have obligations to fulfill. The absence of mutual obligations highlights the unique nature of unilateral contracts, primarily seen in insurance policies where coverage is guaranteed upon the occurrence of specific events, provided those events fall within the terms of the contract.