What does the concept of reasonable expectations refer to in insurance?

The concept of reasonable expectations in insurance refers to the belief that insured individuals deserve coverage that meets their expectations based on the representations made by the insurer. This principle acknowledges that when individuals purchase an insurance policy, they do so with certain assumptions about the scope and nature of the coverage being provided. It aims to protect policyholders from confusion or misunderstanding regarding what coverage they should reasonably expect based on the policy's wording and the insurer's marketing materials.

In practice, this means that if an insurance policy is ambiguous or if the insurer has made representations that create a certain expectation of coverage, the insured can hold the insurer to those expectations, even if the policy language might suggest otherwise. This principle helps foster consumer trust and fairness in the insurance market, ensuring that policyholders are not left vulnerable due to miscommunication or misleading information from the insurer.