Washington Life Producer Practice Exam

In insurance policies, how are ambiguities typically resolved?

1. In favor of the insurer

2. In favor of the insured

3. In favor of the agent

4. In favor of the company

The correct answer is: In favor of the insured

In insurance policies, ambiguities are typically resolved in favor of the insured. This principle stems from the notion of protecting the consumer, as insurance contracts are often complex and filled with legal jargon that may not be easily understood by the average policyholder. When a policy contains vague or unclear terms, the legal doctrine of "contra proferentem" applies, which means that any ambiguity should be interpreted against the interests of the party that created the contract—in this case, the insurer. This reflects the broader consumer protection laws designed to ensure that individuals are not unfairly disadvantaged when purchasing insurance products. This approach upholds the expectation that insurance companies should provide clear and unambiguous terms in their policies, aligning with the goal of making insurance accessible and understandable for consumers. As such, if there's confusion about a policy's language, courts and regulatory agencies will typically rule in favor of the insured party, ensuring they receive the coverage they believed they were purchasing.