Insurance is a contract of "adhesion"

"Adhesion" sounds worse than it is. All it really means is that an insurance policy is almost always "take it or leave it." For the ordinary consumer, you can take the "almost" out of the sentence. Insurance contracts are not negotiable. You can take the contract with the provisions available, or not take the contract. Not only the insured, but also the insurer--the insurance company--is restricted in what the contract can say. State law, and occasionally federal law, governs what provisions must be in most insurance contracts. In Arkansas, the insurer must file the policy with the Arkansas Insurance Department. In the real world of insurance, most insurers don't write their own policies. They buy them from companies that specialize in writing policies. For that reason, policies you get from different companies often contain identical language.


Insurance policies are supposed to be written in plain English

Insurance policies used to be written in an arcane jargon that even lawyers found difficult to understand. Now consumer insurance policies must be written in plain English. That does not mean that they will be "easy" to read. It just means that they are easier to read than they used to be. Courts will interpret the language of insurance policies in their plain, ordinary, and popular sense. However, they will remember that it is an insurance policy that they are interpreting. They will not adopt an unreasonable meaning. An interpretation of a policy that neutralizes a provision of a policy won't be accepted by the courts. If language of a policy is reasonably subject to two or more meanings, the courts will use the interpretation most favorable to the insured.


It is the insured's duty to read the policy

It is the duty of an insured--that's the person who buys an insurance policy--to read the policy. The insured has a duty to educate himself or herself about the terms of the policy. If the policy places duties on the insured, the insured has a duty to know what those duties are. In the real world, I know from over 25 years of representing insured people that few people read insurance policies. In fact, with the exception of lawyers in the insurance field, I have learned that few lawyers actually read their own insurance policies. But if you find yourself in a lawsuit about insurance coverage, you need to read your policy. If you fail to do so, you fail to do so at your own peril.


Be sure to report claims early

Most insurance policies require insureds to report claims promptly. The policies make the reporting of claims a "condition precedent" to recovery. Failure to report the claim can prevent the insured from recovery. Also, be sure to retain documentation of all your communications with the insurance company. Make notes of every time you talk to the representatives of the company.


If you have to sue on an insurance policy

The burden of proving coverage is on the insured. Once the insured has met that burden, the insurer can try to escape liability by proving an exclusion applies. The burden of proving an exclusion is on the insurer. Very frequently whether the insured or the insurer wins depends on whether the question is coverage or the applicability of an exclusion. Insurance policies are often drafted to make as much of the proof as possible fall in the category of coverage rather than exclusions. Whether a particular fact has to do with coverage or an exclusion is often a question of interpretation of the policy.


Technicalities in insurance litigation

Your lawyer will be aware of the technicalities in insurance litigation. Some technicalities are fairly simple. For instance, unless there's a good reason that you cannot do so, you must attach a copy of your insurance policy to a complaint on an insurance case. Other technicalities are more nuanced. There is a provision for recovery of penalty and attorney's fees under Arkansas law in some circumstances. If you get 80 percent of the amount sued for, you can recover a 12 percent penalty and--in the discretion of the court--an attorney's fee.


Different kinds of insurance: First Party and Third Party coverage

There are many "lines" of insurance. Some insurance is designed to protect the insured from losses he or she might incur, such as fire, storm, theft, and the like. This is often called "first party" insurance. Other insurance is designed to protect the insured from liability for damage caused to a third party. This is called "third party" insurance. Third party insurance often comes with the right to a legal defense. The insurance company will hire a lawyer to protect you. That lawyer is your lawyer, not the insurance company's lawyer.


Bad Faith

In very rare circumstances, insurance companies have been held liable for dealing with their insureds in bad faith. This is extremely unusual in Arkansas, but it has been known to happen in a few landmark cases. Bad faith does not mean that the insurance company merely denies a claim, even if it is a meritorious claim. Bad faith is malicious, dishonest, or oppressive conduct to avoid liability under a policy. We are fortunate in Arkansas that this kind of misconduct does not happen often, but when it does happen juries and judges have not been pleased with the insurance companies that have engaged in this misconduct.


Insurance litigation

The bad luck that leads to claims in the first place is bad enough. It is even worse when you add a conflict with your insurer to the problems you already have. You can always hope that things work out, but if it becomes clear that you and your insurer are not communicating, it is a good idea to talk to an attorney who is familiar with insurance disputes sooner rather than later. The longer disputes of this nature go on, the more expensive they can be to unravel. Sometimes you read about large judgments against insurance companies in the newspaper. They do happen from time to time. But in the real world, a reasonable solution within a reasonable time is usually far better for you than a headline-making judgment many years after the loss.