In Ransom v. Penn Mutual Life Ins. Co. (1954) 43 Cal.2d 420, the insured, in response to Penn Mutual's solicitation, underwent a physical examination, submitted a written application for insurance on a Penn Mutual form, and paid the first premium. Penn Mutual requested another medical examination, but in the interim Ransom died in an automobile accident. ( Id. at p. 422.) The Supreme Court considered whether an insurance agreement was in effect at the time of Ransom's death. ( Id. at p. 423.) The Penn Mutual application contained a conditional receipt, which provided in part that "if the Company is not satisfied as to such acceptability acceptable under the Company's rules for insurance at the rate of premium and the amount applied for, no insurance shall be in force until both the first premium is paid in full and the policy is delivered while the health, habits, occupation and other facts relating to the Proposed Insured are the same as described in ... this application ... ." ( Ransom, supra, 43 Cal.2d at p. 423.) The court framed the question thusly: "We must determine whether a contract of insurance arose immediately upon receipt by defendant of the completed application with the premium payment, subject to the right of defendant to terminate the agreement if it subsequently concluded that Ransom was not acceptable, or whether, as defendant contends, its satisfaction as to Ransom's acceptability for insurance was a condition precedent to the existence of any contract." ( Ransom, supra, 43 Cal.2d at p. 423.) The court ultimately held that a contract of insurance arose upon Penn Mutual's receipt of the completed application and the first premium payment. The court reasoned that the language of the insurance application offered the applicant two alternatives--either pay the first premium upon signing the application, in which event " 'the insurance shall be in force ... from the date ... of the application,' " or pay upon receipt of the policy, in which event " 'no insurance shall be in force until ... the policy is delivered.' " ( Ransom, supra, 43 Cal.2d at p. 425.) This language created the reasonable belief that by paying the premium in advance, the applicant would secure the benefit of immediate coverage. As the court noted, "there is an obvious advantage to the company in obtaining payment of the premium when the application is made, and it would be unconscionable to permit the company, after using language to induce payment of the premium at that time, to escape the obligation which an ordinary applicant would reasonably believe had been undertaken by the insurer." (Ibid.) The court also found temporary insurance remains in effect even if the agent fails to detach and use the receipt form. ( Id. at p. 426.) The court acknowledged that some of the language of the application supported the insurance company's position that payment of the first premium and acceptability of the applicant were both conditions precedent to coverage. However, such language only created an ambiguity that, under the usual rules of contract interpretation, had to be resolved against the insurer. ( Ransom, supra, 43 Cal.2d at p. 425.) Ransom thus articulates a contract-based reasonable expectations doctrine. Ambiguous language in an application for insurance was interpreted to effectuate the reasonable expectations of the prospective policyholder to temporary coverage. The court in Ransom had no occasion to resolve the question of whether and how an insurer could terminate interim coverage created under a conditional receipt following payment of the first premium, though it noted that some courts had suggested coverage could be terminated only by rejection of the application and return of the premium payment. ( Ransom, supra, 43 Cal.2d at p. 425.)