West Virginia State Life Insurance Practice Exam

If a contract of adhesion contains complicated language, in whose favor would the interpretation typically be?

1. Insured

2. Insurer

3. Beneficiary

4. Agent

The correct answer is: Insured

In a contract of adhesion, which is a type of agreement where one party has significantly more power than the other in creating the contract terms, the interpretation typically favors the insured. This is grounded in the principle that contracts should be understood as an agreement between unequal parties, where the party with less bargaining power (the insured) is often the one benefiting from favorable interpretations. Complicated language can create potential ambiguities; when issues arise regarding the interpretation of such language, courts generally rule in favor of the insured. This reflects a broader legal principle aimed at protecting the consumer, as insurance contracts are often lengthy and complex. The rationale is that the insured, who usually does not have legal expertise, should not be penalized for misunderstandings arising from unclear or complex wording that was imposed by the insurer, who has the resources to craft clearer terms. This interpretation ultimately helps maintain fairness and justice in the insurance marketplace, ensuring that insurers cannot take advantage of insured parties through obscure language that may not be readily understood.