Expert Advice When You Need It Most
Posted almost 3 years ago. Applies to Washington, 1 helpful vote, 0 comments
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It’s all about the PolicyAn auto insurance policy is a contract. 25 Wash. Prac., Contract Law And Practice § 5:8. So, the first thing you must do is read the policy. Reading an insurance policy is an art. It is very easy to overlook important clauses, so it is important to be thorough and purposeful in reviewing a policy. I suggest the following process: • Identify the potentially applicable coverage language • After examining the grant of coverage, go through the exclusions and conditions • Carefully apply all of the definitions in the policy • Be precise and thorough, and mark all potentially applicable language 2
Principles of Policy InterpretationAfter reading the policy you need to interpret what it means. If the language of the policy is clear and unambiguous then it controls and the court may not modify the contract. 25 Wash. Prac., Contract Law And Practice § 5:11. If the language is not clear and ambiguous you would next look to the mutual intent of the parties, however, in insurance contracts courts will rarely if ever do this because insurance contracts are contracts of adhesion. 25 Wash. Prac., Contract Law And Practice § 9:19. Words should be given their plain and ordinary meaning. Daley v. Allstate Ins. Co., 135 Wn.2d 777, 784 (1998); 25 Wash. Prac., Contract Law And Practice § 5:11.The clauses in the policy should be considered as a whole with the policy given its fair, reasonable, and sensible meaning. Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wn.2d 654, 665-66 (2000). The language, or a clause, in the policy is ambiguous if it is susceptible to two or more different but reasonable interpretations. 3
Rules of Construction Checklist:1. Read the Policy -- language controls if it's clear and unambiguous 2. If not, look to parties' mutual intent at drafting (there usually is not any in auto insurance contract because they are contracts of adhesion) 4. Give words their plain and ordinary meaning 5. Consider policy clauses as a whole to give it its fair, reasonable, and sensible meaning 5. Construe ambiguities in favor of the insured 6. Determine what the insured could reasonably expect, because some courts will consider it 4
Commonly Overlooked Clauses that can Provide much Needed ReliefInsurance policies are complex and have many different facets. Most policies generally provide coverage for a wide variety of injuries that are not immediately obvious. In auto insurance policies this type of coverage can often be found in the “Personal Injury Protection Coverage” or “Medical Payments” section. These sections often provide coverage for things most people do not realize and can provide much needed relief for your client. Auto insurance policies almost always contain medical payment sections and often provide coverage for items such as: injuries to an insured if they are hit as a pedestrian, income continuation, and if the most tragic circumstances arise, funeral expenses (some jurisdictions require proof the deceased was wearing a seat belt at the time of death). Whenever you are faced with a case involving a vehicle, obtain certified copies of all the applicable auto insurance policies and carefully review them. Your client may have coverage and not even realize it. 5
Common IssuesAn issue on policy interpretation most often arises when an insurance company denies a claim. When an insurance company denies a claim it usually does so for one of three main reasons: (1) there is no coverage, (2) you have coverage but you are not in compliance with the requirements of the policy so you are not covered, and (3) you have coverage but your claim falls into an exclusion. 6
UIM and the “Sue Us” ClauseSome insurance companies have adopted the use of a “Sue us” clause or mandatory arbitration clause in relation to disagreements on UIM coverage issues. These clauses often require insureds to engage in litigation to receive needed coverage in UIM situations, or begin a separate additional lawsuit just to address UIM issues. Regardless of the precise language of the clause, all versions tend to increase costs to the insured and delay compensation. Some attorneys have adopted an extremely aggressive approach, suing the insurance companies for bad faith and ultimately using motions to compel to obtain copies of claims manuals, internal memos, personnel files and evaluation. Whatever approach you choose, carefully consider the possible costs and benefits to your clients and thoroughly research the particular clauses at issue before proceeding. 7
ConclusionThorough, precise reading of the insurance policy is critical in any case involving insurance. The careful reading of the policy at issue, keeping in mind the rules of construction and potentially applicable statutes, can reveal hidden treasures that mean the difference between much needed relief for your clients and losing your case. Therefore, you should take every opportunity to improve your proficiency in interpreting and understanding the issues in insurance policies, because your understanding will ultimately determine your ability to effectively communicate with the insurance company, minimize litigation expenses, and maximize the ultimate coverage provided. Additional ResourcesRelated Questions1 Attorney answers: 
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