Policy Interpretation
Burden of Proof
Who bears the burden of proof in insurance claims and how it shifts based on policy type and coverage structure.
Definition
The burden of proof determines who must demonstrate that coverage applies or that an exclusion eliminates coverage. In insurance, the burden shifts between the policyholder and the carrier depending on the policy type and the stage of the dispute.
How It Works
Open-Peril Policies
The policyholder only needs to prove that a loss occurred. The burden then shifts to the carrier to prove that an exclusion applies. If the carrier cannot demonstrate the exclusion, coverage applies.
Named-Peril Policies
The policyholder must prove that the loss was caused by one of the specifically listed perils. If the cause does not match a named peril, there is no coverage.
Burden Shift Sequence
- 1Policyholder: Proves that a loss occurred and files the claim.
- 2Carrier: Must prove that an exclusion applies (open-peril) or policyholder must prove a named peril caused the loss (named-peril).
- 3Policyholder: If an exclusion is cited, can argue that an exception to the exclusion restores coverage.
Why It Matters
Understanding the burden of proof changes how you approach a denied or disputed claim. If you have an open-peril policy and the carrier denies the claim, ask them to prove the exclusion applies. If they cannot, coverage should be granted.
What to Check
- Determine whether your policy provides open-peril or named-peril coverage for the affected item.
- If denied, check whether the carrier has met their burden by citing a specific exclusion.
- If an exclusion is cited, check whether an exception restores coverage.
What Should Happen Next
If the carrier has not met their burden of proof, communicate this in writing and request reconsideration. Cite the policy language and explain why the burden has not been satisfied.
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