An independent landscape architect purchases a commercial general liability policy. Several months later, a property damage incident occurs involving a drone used for site surveying. The insurance policy includes a poorly drafted clause regarding "unmanned aerial vehicles" that can be reasonably interpreted in two opposing ways: one interpretation covers the incident, while the other excludes it. The insurer denies the claim based on its own restrictive interpretation. In a legal dispute over this vague language, how will a court most likely resolve the issue?
- It will rule in favor of the architect because the policy is a contract of adhesion, meaning ambiguities are strictly interpreted against the insurer who drafted the agreement.Answer
- BIt will rule in favor of the insurer because under a contract of adhesion, the policyholder is bound by the insurer's intended meaning of the drafted terms.
- CIt will require the architect to pay additional consideration in the form of higher premiums before applying the broader interpretation of the clause.
- DIt will rule in favor of the insurer because the architect's signature on the application acted as an absolute warranty that all coverage terms were fully understood.
Answer
It will rule in favor of the architect because the policy is a contract of adhesion, meaning ambiguities are strictly interpreted against the insurer who drafted the agreement.
Because insurance policies are contracts of adhesion—meaning they are drafted entirely by the insurer with no negotiation permitted on the wording—courts follow the legal doctrine that any reasonable ambiguity must be strictly construed in favor of the policyholder. Since the drone clause has two reasonable interpretations, the court will apply the interpretation that provides coverage to the insured.
Step-by-Step Solution
Key Concept
Contracts of Adhesion and the Rule of Ambiguity