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How Ambiguous Insurance Provisions Are Resolved

Fri Oct 12th, 2018 on     Insurance Claims,    

Whether you’re a policyholder in a health, disability, or property insurance plan, it’s possible that you will encounter — or have already encountered — some blowback when it comes time to submit a claim for benefits.  Insurers are fundamentally incentivized to deny, undervalue, or otherwise mishandle claims so that they can minimize their own costs.  This is particularly true in situations where an important coverage-related provision of the contract is ambiguous and therefore open to interpretation.

In many cases involving an adverse determination by the insurer, the policyholder-claimant is taken by surprise — after all, the policyholder may have interpreted an ambiguous provision quite differently than the insurer.

Let’s take a look at how benefits disputes associated with such ambiguities are resolved.

Interpreting Ambiguity in an Insurance Policy

If you believe that your insurance policy contains an ambiguous provision that is being misinterpreted by the insurer in an effort to deny your rightful benefits, then it’s important that you don’t despair — it’s not necessary that you resign yourself to insurer’s decision.  Florida law imposes beneficial rules that protect you in circumstances where ambiguous insurance provisions are being misinterpreted or misused.

Favoring the Claimant

In Florida, ambiguous insurance provisions are strictly interpreted in favor of the insurance claimant — the courts must interpret any genuine ambiguities against the interests of the insurance provider.

Suppose, for example, that you are a property insurance policyholder, and your plan contains an exclusion clause that is somewhat ambiguous.  Perhaps the clause prevents you from obtaining properly insurance benefits if the weather conditions causing the loss are not extreme.  The plan may not adequately define what constitutes “extreme” weather conditions, however, leaving you confused as to how it will be interpreted.

Now, if your basement is flooded and seriously damaged after a storm, the insurer may argue that the weather was not sufficiently “extreme” to justify coverage.  They may point to the fact that many other homes were not flooded, and it was the particularities of the structure (and the lay of the land) that allowed the flooding to occur.

Given the ambiguity of the exclusion clause, however, the court would be required to interpret the ambiguity in your favor, giving you a right to receive benefits for the damages caused by flooding.

Introduction of Extrinsic Evidence

It’s important to note that, in Florida, external (e.g. extrinsic) evidence may not be used to clarify ambiguity.  For example, an insurer cannot argue that they clarified the ambiguity to you in a meeting with your insurance broker.

Courts must interpret the ambiguous provision using the language of the plan itself.  This is meant to benefit the policyholder — because of this rule, insurers are incentivized to write more specific, precise provisions that cannot be confused as ambiguous.

Contact an Experienced Miami Insurance Law Firm for Guidance

Ver Ploeg & Lumpkin, P.A. is a Miami-based insurance litigation firm that has represented policyholders in a wide range of insurance disputes — including those that involve complicated and/or ambiguous insurance provisions — for over two decades.  We have over 25 employees between our various Florida locations, and on-staff experts to assist with every stage of the dispute process, from evaluating the losses themselves to providing expert testimony on vocational or business issues.

Unlike many of our competitors, we are strong proponents of precise advocacy.  We treat our clients as equal partners, and as such, we work closely to identify all necessary information that will enable us to bring an effective civil action against the insurer (and possibly force the insurer into a disadvantaged position).  Over the decades, our significant case results serve as proof of the efficacy of this approach.

Call (305) 577-3996 today to connect to our Miami insurance law firm and speak to one of our experienced attorneys for guidance.

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