Insurance policy language is often ambiguous, making it difficult for business owners to understand their rights and responsibilities under the policy. In many cases, this is by design. Insurance companies routinely use ambiguous language so they can manipulate the meaning to deny coverage for unsuspecting policyholders.
Ambiguous Language
Insurance policies are generally complex documents with complicated terminology and plenty of fine print. Often, some language in the policy is ambiguous, in that it could reasonably be interpreted in two or more ways. Business owners who submit a claim based on their reasonable interpretation of the policy language may be in for an unpleasant surprise when their claim is denied. While ambiguous terms can appear anywhere in the policy, they often show up in the context of exclusions and policyholder responsibilities.
Exclusions
All insurance policies contain exclusions, which are provisions that allow insurers to limit their liability. Commercial property insurance policies, for instance, generally exclude damage from floods, earthquakes and certain other events. Commercial general liability (CGL) policies typically state they won’t cover claims arising out of the insured’s intentional or wrongful acts or claims stemming from the provision of professional services. However, these exclusions may not be clearly defined in the policy, and the insurer may exploit the lack of clarity to broadly interpret the exclusion and deny your claim.
Policyholder Responsibilities
Insurance companies require that insurers meet certain obligations as a condition of coverage, but the language is often not specific. For instance, policies typically require insureds to provide the insurance company with timely notice of a claim, but without specifying the amount of time. For a commercial property claim, policyholders may be required to give notice “as soon as practicable,” “immediately” or “within a reasonable time” after damage occurred and when they found out or should have found out about the damage. As an insured, if you interpret the meaning of “a reasonable amount of time” liberally and delay giving notice, you may be providing your insurance company with a loophole to deny coverage based on failure to meet the notice requirement.
Fight Back If Your Claim Is Denied
If your insurer denies your claim, you will be notified of the reason in writing. If the stated reason contradicts your understanding of the policy language, don’t assume the insurance company’s word is final. You can appeal directly to the insurance company, providing a compelling, thorough argument of why you are entitled to coverage, based on your interpretation of the policy.
If you get nowhere by appealing directly to the insurer, consider hiring an experienced insurance lawyer to communicate on your behalf. Your attorney can advocate for your position by presenting the insurer with compelling legal arguments and evidence. As insurance companies typically want to avoid litigation and the unknown result at the end of a trial, they may reverse their position once an attorney gets involved and presents them with valid legal arguments. Alternately, the insurer may agree to settle the claim for an amount that is acceptable to you.
As a last resort, you can bring a court case against your insurer. When there are ambiguities in a policy, a court will consider extrinsic evidence submitted by the parties to try to determine their actual intent in entering into the insurance contract. If the mutual intent cannot be determined based on extrinsic evidence, courts may turn to other tools. In many jurisdictions, courts may use the “reasonable expectations” doctrine and construe the policy language based on the policyholder’s expectations, as long as they are deemed to be objectively reasonable from a layman’s point of view.
If you are involved in a dispute with your business insurance company, contact Schartz, Conroy & Hack PC. We have the expertise, experience and tenacity to make insurance companies keep their promises to you and your business.