It is no surprise there is often disagreement over whether an insurance policy provides coverage. There are competing interests to be accommodated and sometimes the language used is clearer to one person than another.

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We are often asked, “How do judges decide what the insurance policy really means?” There are volumes of books in law libraries discussing this very topic, but there are some general principles judges often employ.

  1. A judge is going to look at the whole contract to determine the intent of the parties. You do not just consider one part of the contract, but use all of the parts to interpret other provisions and try to figure out what was really intended.
  2. The courts generally examine the language of the policy to see what the parties meant by the words that were used. For instance, there may be definitions in the policy that tell the meaning of the words.  If not, then the courts usually interpret words in their ordinary and popular sense. Technical words are interpreted in the way that are usually understood by persons in that particular business unless they are clearly used in a different sense.
  3. If the terms are ambiguous or otherwise uncertain, those particular phrases are read in the way that is most favorable to the policy holder or the insured.  Lawyers tend to say the contract is construed against the drafter.  Since the insurance company came up with the language used; it will be read in the light most beneficial to the person insured.
  4. The courts are going to apply any regulations that the insurance department, statutes, or case law require.  For example, it would be against public policy to write an insurance policy that provided protection for committing criminal actions. In certain categories or classifications of insurance, there are required coverages which are mandated by the legislature.  Oklahoma has a statutory fire policy in which the essential elements of the coverage are set forth in the statute and this coverage is provided even if the policy says something different.  The insurance company can add to the minimum coverage, but cannot provide less than the minimum.