It’s common knowledge that when a company or individual goes to purchase insurance, the insurance company is supposed to have its broker or agent discuss the parameters of the policy before issuing it. Many times this doesn’t occur. Often, a homeowner’s policy is purchased when a home is purchased, and the policy is paid through an escrow and monthly mortgage account. I know I blog about this often, however, whatever the insurance is, it is best to read their policy and try to understand if you are adequately insured and what you are insured for.
When insurance is purchased, the insurer underwrites the policy and the insured has no say on the basic terms. There are many exclusions an insurer may put into the policy and sometimes policy limits may even be in question. Many insureds are not properly covered.
Recently, the United States Court of Appeals for the First Circuit relied on plain and unambiguous language of a policy to deny coverage for a loss. In Certain Interested Underwriters at Lloyd’s of London v. Stolberg, 2012 WL 1699931 (1st Cir. May 16, 2012), the insurer claimed there was no duty to defend under the policy and filed a Motion for Summary Judgment. The Court ruled that the interpretation of an insurance policy is a matter of law and the insurer has no duty to defend or indemnify for a defense. This Court also appropriately reinforced that an ambiguity must be real in order to construe it against the insurer. A real ambiguity occurs only if there can be more than one interpretation and reasonably intelligent persons would differ as to which meaning is the proper one.
Knowing what your own policy says and seeking the proper guidance as to what your policy will and will not cover is the only way to avoid misunderstandings. Spending the extra time with your broker or agent to discuss what you need is the best way to prevent any unpleasant discoveries during a time of need.