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Understanding Insurance Policy Provisions
When a consumer has a question about her insurance, the first stop is the insurance policy. An insurance policy is a contract. The terms of a policy are understood to be used in their plain and ordinary sense and from the viewpoint of one not trained in the law. Generally, an insurance policy, like any other contract, will be interpreted as written, unless it is unclear. A word or term may be unclear because it is open to more than one interpretation. Any term that is unclear must be interpreted against the insurance company and in favor of the consumer. So if a term is unclear, it should be interpreted so it meets the reasonable expectations of the consumer. For example, if an insurance company wants to restrict coverage, it must use language that clearly and distinctly communicates to the customer the nature of the limitation. If it does not, the confusing policy language should be interpreted in favor of the customer, resulting in coverage. The organization of the policy may create confusion. For example, a pollution exclusion contained in the "Perils Insured Against" section of a policy was confusing because the title did not give the customer notice that the section included exclusions. Since it was confusing, the exclusion did not apply. Confusion may also be created by other information the customer receives. The customer may receive written and oral information from the insurance company that is not contained in the policy; things like brochures, oral explanations, advertising, applications, and summaries. If these things contain information different from what is in the policy, just what the customer bought may be unclear. If the insurance policy is unclear for any reason, it should be interpreted to meet the reasonable expectations of the customer. If you have read your policy and you think all of the language is unclear you are not alone. Here are some tips to help decipher policy language: 1. Write your agent or adjuster and ask her to mail you a definition or explanation. You need the response in writing so there is no misunderstanding about how the insurance company defined or explained the word, phrase, paragraph, or section. If the definition or explanation is not satisfactory for any reason, send a follow-up letter requesting clarification in writing. 2. The policy probably contains definitions of some words and phrases. Words defined in the policy are often highlighted by bold print or italics. It is not unusual for the policy definition to be quite different from a dictionary definition. For example, a homeowners policy defines water as "water (H2O) alone, whether frozen or not...." The dictionary contains an extensive definition of "water," but does not include water in its frozen form. So the policy definition includes snow and ice, but the dictionary definition does not. The policy definition controls. 4. A court has probably interpreted the word or phrase you are struggling with. A number of case reporting services simplify the research. See if your local law library has: Susan J. Miller & Philip Lefebrvre, Millers' Standard Insurance Policies Annotated (4th ed., 1995); or annotated insurance forms published by the Tort and Insurance Practice Section, American Bar Association. The National Underwriter Company (P.O. Box 14367, Cincinnati, OH 45250-0367; 1-800-543-0874) publishes coverage guides that include policy interpretation and analysis. Websites containing a collection of insurance information sites include www.law.uconn.edu/library/ilc/ organization.htm and www.sirnet.org/sirlinks.htm. 5. The Nevada Department of Insurance, Consumer Services Section (788 Fairview Drive, Suite 300, Carson City, Nevada 89701; (775) 687-4270, facsimile (775) 687-3937; insinfo@doi.state.nv.us may be able to help. 6. If you have questions or concerns call me. I am here to help. |