General Insurance PrinciplesQuestion 163 of 474
Because an insurance policy is written by the insurer and offered on a take-it-or-leave-it basis, any ambiguity in the wording is generally interpreted:
a.By splitting the difference equally
b.By a neutral government agency
c.In favor of the insurer
d.In favor of the insured
Explanation
An insurance policy is a contract of adhesion, drafted entirely by the insurer with no negotiation by the applicant. Because the insured had no hand in the wording, courts resolve genuine ambiguities in favor of the insured. This rule encourages insurers to write clear policy language and protects consumers who must accept the contract as written.
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