Resolving Ambiguities In Insurance Policy Language: The Contra Proferentem Doctrine And The Use Of Extrinsic Evidence
- Topics:
- Directors and Officers Coverage
- Tags:
- Ambiguity,
- Business Operations,
- Corporate Insurance,
- Finance,
- Financial Planning,
- Insurance,
- Policy Language
- Source:
- Robins, Kaplan, Miller & Ciresi
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Overview: A court’s first step in interpreting allegedly ambiguous insurance contract language is to determine whether there is in fact an ambiguity. This initial step involves considering so-called allegedly ambiguous terms not in the abstract, but rather in the context of the written policy itself. Thus, courts will employ standard contractual construction principles, such as reading the contract as a whole, or giving effect to all terms, to properly understand particular terms or words in a full policy context. Only if the policy language is susceptible to two reasonable interpretations will the court find language to be ambiguous. If there is in fact an ambiguity, most courts today will not immediately construe the ambiguity against the drafter. Before applying the doctrine of contra proferentem, courts first attempt to remove the uncertainty surrounding the intent of the policy language by considering certain extrinsic evidence relating to the communications, negotiations, knowledge and common understanding of the parties in order to determine their mutual intent.
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Format: PDF | Size: 119KB | Date: May 2003 | Pages: 33
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