What term describes the expectation that an insured has based on an agent's communication?

The term that describes the expectation that an insured has based on an agent's communication is known as "reasonable expectations." This concept indicates that when an insurance agent communicates policy terms, coverages, and benefits, the insured reasonably assumes that these representations accurately reflect what the insurance policy will provide.

In insurance, reasonable expectations help to establish fairness and equity in the contract between the insurer and the insured. If an insured has a legitimate expectation based on the communication from the agent, it can influence how disputes regarding coverage are resolved. Courts often uphold the reasonable expectations doctrine to ensure that policyholders are not unfairly disadvantaged by ambiguous language or misleading representations made by agents.

This understanding is crucial for both agents and policyholders, as it influences the trust relationship and impacts claims handling processes. A clear demonstration of what a policyholder is reasonably led to believe helps in maintaining confidence in the insurance industry.