When might courts favor the insured regarding ambiguous contract terms?

Courts often favor the insured in situations involving ambiguous contract terms because contract interpretation principles dictate that any ambiguity should be resolved in favor of the party who did not draft the contract. This is based on the principle of protecting the insured, who typically has less bargaining power compared to the insurer. When contract terms are not clear, it can lead to different interpretations, and courts strive to uphold the reasonable expectations of the insured.

The rationale is that insurance contracts are often written in complex legal language, making it difficult for the average consumer to fully understand their rights and obligations. Therefore, when terms are ambiguous, courts take the approach that it is fair to construe the language in a way that benefits the insured, thus ensuring they receive the coverage they reasonably expected. This principle encourages the clarity and transparency needed within such contracts, discouraging insurers from using vague language to avoid coverage.