What does the principle of reasonable expectations require?

The principle of reasonable expectations is designed to ensure that policyholders have their reasonable expectations fulfilled regarding insurance coverage. This principle emphasizes that even if a policy has specific language or technical jargon, the insured’s perception and understanding of what is covered should be taken into account.

In this context, making exclusions clearly visible to the insured is critical. It ensures that policyholders are aware of what is not covered, which helps them to make informed decisions and protects them from unpleasant surprises when a claim is submitted. If exclusions are hidden or obscured, it can lead to misunderstandings about the scope of the coverage, which would violate the reasonable expectations principle. By requiring that exclusions be clearly visible, the principle promotes transparency and fairness in insurance contracts, allowing policyholders to fully understand the limits of their coverage.

This principle does not necessarily demand that every clause be negotiable, nor does it require that maximum coverage options be offered universally. Similarly, while clarity in coverage is important, it does not mandate that coverage must be explicitly stated in every single contract clause, as long as the overall expectations are fulfilled.