Why do policy ambiguities always favor the insured?

The correct choice focuses on the principle that insurance contracts are considered contracts of adhesion. This concept means that these contracts are drafted by one party, usually the insurer, and presented on a take-it-or-leave-it basis to the other party, the insured. As a result, the insured typically has little to no negotiating power regarding the terms of the contract.

When ambiguities arise within these contracts, legal principles often dictate that any unclear or ambiguous language must be interpreted in favor of the insured. This is intended to protect the insured from potential exploitation or misunderstandings that could arise from the complexity of the contract language that they did not draft. Courts generally favor the interpretation that provides the most benefit to the insured, acknowledging their more vulnerable position in the contractual relationship.

This principle is a significant aspect of insurance law, ensuring that the rights and protections of the insured are upheld against potentially misleading or complex terms set forth by the insurer.