What is the definition of Aleatory Contract?

An Aleatory Contract is a contract where one party sells a promise or a guarantee in exchange for something of value (such as money). This promise is linked to the occurrence of an event that is not certain to happen.

An insurance product or contract is an example of an aleatory contract. In exchange for premiums from the policy holders, the insurance company provides a promise that it will pay benefits in cases something happens. For example, an insurance company promises to pay death benefits upon the death of the insured person, when that death falls under the coverage period of the insurance contract. Another example would be a person paying premiums to cover the possibility of a fire or any disastrous event happening on their home. The insurance company will pay the policy owner when his house is destroyed by fire.

• Competitive State Fund
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• Businessowners Policy / BOP
• Employer’s Liability