What characteristic defines insurance policies as aleatory contracts?

An insurance policy is defined as an aleatory contract primarily because it involves an exchange of unequal amounts. In this context, the policyholder pays a relatively small premium while receiving a significant financial benefit if a covered event occurs, such as a claim for a loss. The essence of an aleatory contract is the uncertainty of the outcome – the insurance company assumes the risk and promises payout under certain conditions, which may not occur during the policy term.

This characteristic sets insurance apart from other contractual agreements where parties exchange equivalent values. In insurance, the potential for a large payout in relation to the small premiums paid exemplifies this asymmetric exchange, emphasizing the risk management aspect inherent in insurance contracts.