Is Auto Insurance A Contract? 
Most insurance policies , including auto insurance , are based on a Unilateral Contract . As long as you continue to pay the premium , the company is contractually obligated to pay any claims according to the contract . Either party has the right to terminate the contract in the case of auto or home or other property and casualty coverage . The policy holder may do so at any time simply by not paying the premium . Usually the insurance company must wait until the anniversary date or renewal date of the policy . Life insurance may not be terminated by the insurance company as long as premiums are paid unless there is evidence of fraud and misrepresentation . 