Almost every type of insurance policy follows the same general structure: a short “insuring agreement,” which states in broad, enticing language the coverage provided, followed by many pages of conditions, exclusions, and other terms all seeking to limit the coverage promised in the short, enticing insuring agreement. While the insuring agreement itself is often quite simple and straightforward, many of the subsequent limiting terms and definitions are subject to multiple interpretations, which can cause disputes between policyholders and their insurance companies when claims arise. Most courts construe ambiguities in insurance policy language against the insurance company and in favor of the policyholder, but before doing so courts often will try to determine whether there is a single applicable reading of the exclusion or definition in question. Thus, parsing the language of your insurance policies is critical throughout all stages of establishing and pursuing coverage — from purchasing a policy through claim submission, cooperating in the insurance company’s investigation, and, when necessary, litigating regarding coverage obligations. As is the case with many contracts, and as demonstrated by the three scenarios discussed below, the devil is often in the details.
While the interpretation of insurance policy language is critical for claims brought by policyholders in all industries and involving many disparate types of coverage, the cases below focus on environmental contamination, shareholder derivative actions, and copyright and trademark infringement. As this wide variety of risks makes clear, review and analysis of policy language is important both before and after claims arise.