Ambiguities in insurance contracts are interpreted in favor of the insured. This rule is known as what?

The principle that ambiguities in insurance contracts are interpreted in favor of the insured is known as the reasonable expectations doctrine. This doctrine is based on the idea that policyholders should not be held to terms and conditions they did not expect or understand. In dealing with insurance agreements, when a provision can be interpreted in multiple ways, the interpretation that favors the insured is applied. This is meant to protect individuals who may not have the legal expertise to fully understand complex contract language or nuances.

The other terms listed in the choices relate to different concepts. Subrogation refers to the insurer's right to pursue a third party responsible for a loss after compensating the insured. Insurable interest denotes the requirement that the insured must have a legitimate interest in the subject of the insurance policy. Adhesion refers to contracts drafted by one party, with the other party having little to no ability to negotiate or alter the terms. While adhesion contracts are common in insurance, it is the reasonable expectations doctrine that specifically addresses how ambiguities should be interpreted.