General Insurance PrinciplesQuestion 132 of 474
Because the insured cannot negotiate the wording of a standard homeowners policy, ambiguous language in the policy will generally be interpreted:
a.In favor of the insurer
b.Against the insurer who drafted the contract
c.By a coin flip per California Insurance Code §1654
d.Equally between the parties
Explanation
An insurance policy is a contract of ADHESION drafted by the insurer. Under longstanding California law, any genuine ambiguity is construed against the drafter — the insurer — to protect the insured who had no chance to negotiate the terms.
Law Reference: Cal. Ins. Code §1633; Civ. Code §1654This topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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Related questions on this topic
- An applicant for a homeowners policy admits she has filed four small jewelry-theft claims in the last three years, two of which were closed as suspicious. This is BEST described as which type of hazard?
- Leaving the garage door open all day because 'my homeowners policy will pay if anything is stolen' is an example of which type of hazard?
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- A producer binds coverage on a California home while the application is still in underwriting. Under Insurance Code §382.5, a binder issued in compliance with that section is:
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