P&CNationaleasy
Because an insurance policy is drafted by the insurer and offered to the insured on a take-it-or-leave-it basis, it is characterized as a contract of adhesion. What interpretive rule follows directly from this characterization?
AAmbiguities are resolved by reference to prevailing industry custom rather than the policy text itself
Ambiguities are construed against the drafter under contra proferentem, in favor of coverage
CThe parol evidence rule bars all extrinsic evidence from ever being considered to interpret the policy
DThe court applies the plain-meaning rule and disregards any genuine ambiguity in the policy entirely
Why this is the answer
Insurance policies are contracts of adhesion: the insurer drafts standardized language and the insured has no meaningful ability to negotiate terms. When a policy provision is genuinely ambiguous — susceptible to more than one reasonable interpretation — courts apply contra proferentem and construe the ambiguity against the drafter (the insurer), generally in favor of coverage. This rule operates only when ambiguity exists; unambiguous language is enforced as written under the plain-meaning rule.
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