How will a court interpret ambiguous provisions in an insurance policy?

• A. A court will always interpret ambiguous provisions in favor of the insurer.
• B. A court will interpret ambiguity against the drafter in all cases.
• C. A court will interpret ambiguous provisions in favor of the insured.
• D. A court will ignore ambiguity and enforce the literal text.

Answer: (C)

Ambiguity in an insurance policy is resolved in favor of the insured. When a term isn’t clear, courts apply the rule known as contra proferentem, meaning any ambiguity is interpreted against the drafter of the contract, which is usually the insurer. Insurance policies are drafted by insurers, and there’s a policy aim to provide coverage rather than deny it when language is unclear. Courts also consider the insured’s reasonable expectations of coverage, so ambiguous terms are read in a way that preserves or broadens the insured’s protections. That’s why the best interpretation is to give the insured the benefit of the doubt in the face of unclear language.