What principle dictates that unclear contract terms are interpreted in favor of the insured?

The principle that dictates that unclear contract terms are interpreted in favor of the insured is best captured by the case law of insurance contracts. This principle arises from the understanding that insurance policies are often complex and filled with legal jargon that the average person may not fully understand. Courts typically uphold the notion that if there is ambiguity in the language of the contract, it should be construed in a manner that benefits the insured—the party that did not draft the contract and may have less bargaining power.

This approach reflects a broader concern for fairness and protecting consumers within the insurance market. Insurers, as the drafters of the policy, are expected to clarify any ambiguous terms to ensure that the insured understands their coverage. Consequently, when faced with a dispute regarding unclear wording, the legal interpretation tends to favor the insured's reasonable expectations regarding what they believed their policy covered.

In contrast, the other options focus on different legal concepts. The principle of reasonable expectations relates to what an insured party reasonably believes they are covered for based on representations made by the insurer. The contractual fairness principle is more about the overall fairness of contracts than specifically addressing ambiguities. The doctrine of unconscionability pertains to contracts that are excessively unfair or oppressive, typically evaluated in consumer contexts but not specifically