Policy Interpretation
Policy Ambiguity
How ambiguous policy language is interpreted in insurance claims and why it generally favors the policyholder.
Definition
Policy ambiguity occurs when the language in an insurance policy can reasonably be interpreted in more than one way. Under the legal doctrine of contra proferentem, ambiguous language in a contract is interpreted against the party that drafted it — in this case, the insurance carrier.
How It Works
Contra Proferentem
A legal doctrine that requires ambiguous contract language to be interpreted against the drafter. Since the carrier wrote the policy, ambiguity favors the policyholder.
Reasonable Expectations Doctrine
Coverage should match what a reasonable person would expect based on the policy terms. Hidden or unexpected exclusions may be unenforceable under this doctrine.
When Ambiguity Is Found
A term is ambiguous if a reasonable person could interpret it in more than one way. This is determined by the court, not by the carrier's internal interpretation.
Why It Matters
Many claim denials rely on the carrier's interpretation of policy language. If that language is ambiguous, the denial may not be legally supportable. This is a powerful tool for policyholders disputing a denial.
What to Check
- Read the policy language cited in the denial. Can it be reasonably interpreted in your favor?
- Is the key term defined in the policy? Undefined terms are more likely to be found ambiguous.
- Does the exclusion use broad, vague, or undefined language?
- Check case law in your state for precedent on the specific language at issue.
What Should Happen Next
If you identify ambiguous language in your policy, include this analysis in your appeal or supplemental submission. Reference the contra proferentem doctrine and any relevant case law. If the carrier maintains their position, legal consultation may be warranted.
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