Question

Because insurance is a contract of adhesion, ambiguous language in a contract will show which party at fault?

1) insurance company
2) MGA
3) insured
4) agent

Answer 1

If there is ambiguous language in an insurance contract, the insurance company is typically at fault because insurance is a contract of adhesion, and they are the ones who draft the terms of the policy.

Step-by-step explanation:

Because insurance is a contract of adhesion, when there is ambiguous language in a contract, the fault typically falls on the party that authored the contract. Since insurance policies are drafted by insurance companies, in the event of ambiguity, the fault is generally attributed to the insurance company. This principle is in line with the legal interpretation that favors the insured as they typically have less input in the contract terms, and such contracts are often presented on a "take it or leave it" basis. In the question's context, this would mean that if there is ambiguous language in an insurance contract, it is the insurance company (option 1) that will be shown at fault, and not the Managing General Agent (MGA), the insured, or the agent.