What Does Consideration Mean?
A consideration is an exchange of money for the guarantee of an act preformed or another benefit provided. In the context of insurance, the insurance company gives the consideration of coverage for losses as long as premiums are paid. If a person wants to continue to have the option of this consideration, then they can buy a policy and pay premiums.
Insuranceopedia Explains Consideration
In insurance, just like in many areas of business, one party can only receive benefits from another party in trading something of value. When done in the insurance world, it is called paying premiums. Doing so allows a person to receive fair consideration from the insurance company.
For example, a person who pays auto insurance premiums to an auto insurance company would receive consideration if they experienced a covered loss to their vehicle. Under this consideration, the auto insurer would pay for the losses.