Nebraska Life and Health Insurance Practice Exam

In the context of contracts of adhesion, when ambiguities arise, the principle of "contra proferentem" is applied. This legal doctrine states that if a contract is drafted by one party (typically the insurer) and there is an ambiguity in the language of the contract, the interpretation that favors the non-drafting party (usually the insured) should prevail.

Contracts of adhesion are typically characterized by their imbalanced bargaining power; one party presents the terms, and the other party must either accept or reject them without negotiation. Because the insurer, as the drafter, has more control over the content of the contract, any unclear language will be interpreted in favor of the insured to protect their interests. This aligns with the consumer protection philosophy found in insurance regulation, which seeks to ensure fair treatment of policyholders.

Thus, should ambiguities be present in an adhesion contract, they are resolved in favor of the insured, recognizing the need to protect the typically less powerful party in the contractual relationship.