What is the primary obligation of the insurer in a contract of insurance?

In a contract of insurance, the primary obligation of the insurer is to pay money or settle claims. This foundational duty is crucial as it represents the core function of insurance: to provide financial protection against loss. When an insured event occurs, such as an accident or disaster, the insurer is responsible for compensating the policyholder or settling claims that arise as per the terms of the insurance policy. This responsibility is what differentiates insurance from other types of contracts, where the primary concern may lie elsewhere.

While negotiating terms with policyholders and conducting underwriting assessments are important aspects of the insurance process, they are preliminary activities that lead to the formation of the insurance contract and the assessment of risk, respectively. Providing legal advice is not a typical duty of the insurer, as their role is focused on fulfilling the financial aspects outlined in the contract. Therefore, the obligation to pay money or settle claims stands central to the insurer's responsibilities in a contract.