Joe has a dispute with his insurance company regarding how much he is entitled to recover on a claim. Joe believes he is entitled to get $8,000 based upon his interpretation of the policy wording. The insurer says the claim is not covered by the policy. Joe sues and a court of law decides that the policy wording is vague and ambiguous, and rules that the loss IS covered. What legal characteristic of insurance resulted in the court's decision?
A) Insurance is aleatory.
B) Insurance is a contract of indemnity.
C) Insurance is a contract of adhesion.
D) Insurance is personal.

Question

Quizplus · Accepted Answer

The court's decision was influenced by the fact that insurance policies are contracts of adhesion, which means that the insurer drafted the contract language and the insured must accept the terms without negotiation. When a contract of adhesion is ambiguous, the court tends to interpret the terms in favor of the party that did not draft the language, which in this case was the insured (Joe).

Joe Has a Dispute with His Insurance Company Regarding How