If you are a typical American, you spend thousands of dollars annually to pay insurance premiums for commercial, life, homeowners, health, automobile, disability, umbrella, and other forms of insurance coverage. Despite the enormous amount paid in premiums to insurance companies, people typically file a small number of claims, so they do not necessarily understand what to expect or how to proceed in filing a claim. Many policyholders are shocked by their insurance company’s use of complex policy language to deny claims; deployment of biased adjusters to understate the value of losses; and requests for irrelevant information to delay payment. Policyholders are in a much better position to deal with this type of conduct when armed with knowledge of two basic principles of insurance policy interpretation.
If the language in an insurance policy is unclear or confusing, courts will tend to interpret any ambiguity against the insurance carrier.
There is a basic principle of contract interpretation that provides any ambiguity in a contract should be construed against the party that drafted the agreement. The rationale behind this rule of contract interpretation is that the party who drafts the contract is in the best position to ensure that the language is precise and clearly states the understanding of the parties. Since insurance companies draft all of the language in an insurance agreement, the insurer generally will be held accountable for ambiguity in the policy.
There are a couple of other related general contract interpretation guidelines that also support construing unclear language against the insurance company. The insurer presents the policy to the insured essentially as a “take it or leave it proposition.” Since there is no negotiation and dual input regarding the terms or provisions of the policy, the one-sided nature of the contract also justifies construing the insurance policy in favor of the insured. Another contract interpretation principle, which is closely related to the previous guideline, supports favoring the insured in cases of unclear language because of the relative difference in bargaining power between the insurance company and the insured. While the insurance company is a large corporation with teams of lawyers and virtually unlimited resources, an individual policyholder has virtually no ability to affect the coverage, conditions, exclusions or limits within the policy.
The insurance carrier has the burden of proving the applicability of an “exclusion” or “condition,” or “limitation” under the policy.
Many insurance policies tend to share a common format regardless of the type of coverage or carrier. A general grant of coverage, referred to as the “insuring clause,” will be followed by dozens of paragraphs and thousands of words that articulate conditions, limitations, and exclusions that limit this broad general authorization of protection. When insurers send a denial letter, the typical explanation for the company’s decision will be based on specific language in the policy, utilizing one of these three types of limiting provisions.
Frustrated policyholders often accept the explanation in the denial letter, seek feedback or clarification from a representative of their insurance carrier, or consult an attorney who does not practice insurance law. These misguided approaches often result in a claim being seriously underpaid or entirely unpaid. An experienced insurance coverage attorney recognizes that the insurance company bears the burden of proving an exclusion within the policy is applicable, unambiguous, and conspicuous. This rule of interpretation of language in an insurance policy is an important departure from the general burden of proof in civil lawsuits. In most cases, a plaintiff (the party filing the lawsuit and seeking relief) has the burden of proof. This special exception for insurance contracts authorizes shifting the burden to the insurance company on certain issues, which can be enough of a change to result in a favorable outcome for the insured.
Our Florida insurance 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 against insurance companies 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.