When the owner of an insurance policy suffers property damage or the threat of a pending lawsuit seeking civil damages, the policyholder might have legal remedies when the insurer fails to uphold its duties under the policy. Although there are many types of civil lawsuits involving contract disputes, insurance claims litigation are unique in a number of ways. The special characteristics of this type of litigation make it essential to obtain advice and representation from an experienced insurance attorney. This blog discusses some of the aspects of insurance litigation that make these cases different from other types of litigation involving contracts.
Unique Aspect of Insurance Policy Interpretation
In a typical lawsuit involving a breach of contract claim, the role of the finder of fact (judge or jury) is to determine the mutual objective intent of the parties to a commercial agreement. However, courts take a very different approach to the interpretation of insurance policies. The presence of ambiguity in the policy is one of the most important factors of contract interpretation involving a claim for property damage, indemnity, or cost of defense. If a policy is ambiguous, courts generally interpret the policy as covering a claim if such an interpretation is reasonable. Although the specific nuance and application behind this principle can vary between states, many jurisdictions require such a reading even when the “more reasonable” meaning of the language would exclude coverage. Another important general principle of insurance policy interpretation is that the carrier typically has the burden of proof regarding limitations of coverage and policy exclusions. If an insured would have a reasonable expectation of coverage under a policy, this interpretation is appropriate by the court.
These principles are founded on certain special characteristics of insurance policies and the relationship of the parties to these agreements. As a general rule, insurance policies are generally “take it or leave it” type one-sided agreements. With relatively narrow exceptions, insurance policies are not the product of negotiation. Rather, the terms and language are imposed by the insurer with almost no input regarding the language or substance from the insured. Policyholders play a very limited role in determining the provisions and language of a policy, and experienced insurance claims attorneys understand the importance of using this principle of policy interpretation to the benefit of an insured.
Background of Negotiations
Although the insured might negotiate premium price regarding certain types of coverage, deductible options, and policy limits, most of an insurance contract is comprised of boilerplate language. The insurance company will want to limit the court’s analysis to the “four corners of the document,” which predictably will be drafted strongly in favor of the insurance company. For example, the insurer might rely on a doctrine like the “parole evidence rule.” This principle involves limiting evidence beyond the contract language in interpreting the terms of a contract. Although this rule can be dispositive in many types of commercial contract disputes, its applicability is less relevant in the context of the special relationship that exists between an insured and insurer.
A successful Florida insurance claims lawyer will understand the importance of the court looking beyond the 4 corners of the document. The policy will typically be a standard form or boilerplate document that is developed by an insurance industry trade association. While the use of standard form agreements facilitates claims processing, underwriting of risks, and reinsurance for carriers, it justifies policy interpretation rules that promote coverage.
Law Applying to Insurance Coverage Disputes
Insurance claims disputes between policyholders and carriers involve a multi-tiered legal framework that is both complex and conflicting. Some of the legal issues that make coverage disputes different from other forms of commercial litigation include the following.
- Lack of Codification: While commercial contract disputes typically are governed by the Uniform Commercial Code, the law governing insurance claims disputes has not been similarly codified into a uniform set of statutes.
- State Law v. Federal Law: While federal law will often be relevant to a contract dispute, insurance claims disputes typically are governed by state law in a particular jurisdiction.
- Choice of Law Questions: Most policies do not have a choice of law provision that indicates the law that will apply in the event of a contract dispute. The law in multiple jurisdictions might be relevant in terms of the applicable law in an insurance coverage case, including the state where the policy is negotiated, issued, and received respectively; or the state where the loss occurred. Many states apply different legal principles to resolve choice of law questions.
Our Miami homeowner’s insurance claims law firm invites you to contact us if you are having difficulties with your insurance company. Miami insurance claims lawyer J.P. Gonzalez-Sirgo handles claims disputes involving property damage under insurance policies in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.