General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
A term in an insurance policy is genuinely ambiguous and can be read two reasonable ways. Because an insurance policy is a contract of adhesion drafted by the insurer, a court will interpret the ambiguous term:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Because the insured has no bargaining power to change the policy's language, the insurer is responsible for drafting clarity. The rule of contra proferentem provides that ambiguous contract language is construed against the party that drafted it — here, the insurer. This protection encourages insurers to write clear policy provisions and tilts genuine doubt toward coverage.
Why the other options are wrong
- B) The drafter bears the risk of ambiguity; courts do not reward the party whose unclear language caused the dispute.
- C) Strict construction against the insured would defeat the adhesion-contract rationale and is not the law.
- D) The agent is the insurer's representative, not an impartial adjudicator of contract meaning.
Memory hook
Ambiguity = the drafter loses. The insurer wrote it, so the insured gets the benefit of the doubt.