In an insurance contract, the applicant's consideration includes which of the following?

• A. The insurer's promise to pay
• B. The statements made in the application and the premium
• C. The contract's definitions
• D. The claim forms

Answer: (B)

Consideration is the value each party exchanges in a contract. For an applicant in an insurance contract, that value comes from two things: the premium paid and the information provided in the application. The premium is money the applicant gives in exchange for coverage, and the statements in the application are the information the insurer relies on to underwrite and price the risk. The insurer’s side of the bargain—its promise to pay benefits if a covered loss occurs—is separate and is not provided by the applicant. Policy definitions are part of the contract’s terms, not what the applicant gives, and claim forms are used after a loss to file a claim, not part of the initial consideration.