What does it mean when an insurance policy is described as a contract of adhesion?

A contract of adhesion is characterized by being formed in such a way that one party, typically the insurer, creates the terms of the contract while the other party, the insured, has little to no room for negotiation. This means that the terms are set by the insurer and presented to the insured on a "take-it-or-leave-it" basis. In this context, the insured does not have the opportunity to alter provisions or negotiate specific terms; they must either accept the policy as it is presented or reject it entirely.

This concept reflects the imbalance of power between the insurer and the insured, where the insurer, as the drafting party, holds the advantage in determining the contract's conditions. Therefore, the correct understanding of a contract of adhesion is that it limits the insured's ability to modify the terms, hence the take-it-or-leave-it descriptor effectively captures the essence of such policies.