Ambiguities in insurance contracts are typically interpreted in favor of whom?

In the context of insurance contracts, ambiguities are generally interpreted in favor of the policyholder. This principle is founded on the notion that insurance agreements are contracts of adhesion, meaning they are drafted by the insurer and presented to the policyholder on a take-it-or-leave-it basis. Given this imbalance in negotiating power, courts often favor the policyholder when a policy’s language is unclear or open to multiple interpretations.

The rationale behind this practice is to protect consumers who may not have the expertise necessary to fully understand complicated legal language in insurance documents. By interpreting ambiguities in the policyholder's favor, the legal system aims to uphold fairness and promote consumer confidence in insurance transactions. This interpretation serves to discourage insurers from drafting overly complex and ambiguous policies that could be misleading to policyholders.