AMBIGUITY & INTERPRETING INSURANCE POLICIES: A QUASI-RADICAL SUGGESTION SKETCHED

Michael Sean Quinn, Ph.D., J.D.
Quinn and Carmona, A Law Firm
Austin, Texas 

Everyone involved in insurance coverage knows that contracts are interpreted against the drafter if there an ambiguity. This rule applies with special force, although the criteria for what counts as ambiguous is about the same across contract law, or so the theory goes.  In truth and practice, some judges are more sympathetic to finding ambiguity than others 

Irrespective of judicial outlooks, undoubtedly not every disagreement between an insurer and an insured as to the meaning of the language of the policy counts as an ambiguity. So how is a judge to determine ambiguity? S/he is to look at ordinary usage. If there are relatively clear differences in legitimate usages to be found there, then there is ambiguity; if there are no such differences, then there is not.  Dictionary entries may also help. 

Unquestionably, determining ambiguity is up to the judge as it is regarded as a matter of law and not a matter of fact.  But is it really always a matter of law?

If a decision as to ambiguity must be made for a highly technical scientific and/or engineering–not to mention mathematically area–should a judge simply decide such a matter? My impression is that the answer is “No.” The judge will get reports from a number of experts as to the subject matter and as to the use and meaning of the relevant language. 

But, of course, different areas in which lawsuits arise are of varying degrees of esoteric complexity. 

Furthermore, it is often the case that different types of business insurance have special vocabularies and are therefore not dependent upon and may be at variance with common common usage of language.  In one important case, for example, the insurer claimed that the term “blanket insurance policy” had an established meaning that was used industry-wide. This claim was completely false, and it would have saved a fortune in processing the case if an expert on the relevant language had submitted an affidavit and been deposed. 

Lurking around in the background is fact that the legal profession as a matter of history has simply not thought about. The problem is this. The legal profession draws a sharp distinction between “matters of law” and “matters of fact,” where the meaning of words is not a matter of fact. 

This outlook–or conceptualization–is simply false, as a general point. Studying language is often an empirical study and therefore a matter of fact.  One can study this form of inquiry and research in college and graduate school. Quite often, the study of language is an empirical matter. Interestingly, even those who research and write dictionaries do empirical research. A premier case of this is the Samuel Johnson dictionary from the Eighteenth Century, although the nature of his research was somewhat different than is now common.  

In any case, as a general matter, “meaning determination” and therefore “ambiguation identification” are not simply contemplative matters or anything like simply legal research; often experts are needed, although some cases are so simple that any educated person can easily know from common usage and common knowledge what terms mean and which ones are ambiguous. Not even computerized or digital searches always make a substantial difference. 

Now, I understand that my suggestion is not just a minority view but a largely rejected view–to the extent that anyone has thought about it all. Still, it seems wise to me that litigators should keep this view in mind and act on it. For example, counsel should consider using language experts on subtle, difficult, or specialized matters. Court opinions and participants in a given industry are not the particular good standards, except for extraordinary matters involving science, mathematics, and/or contemporary engineering. 

As always, in almost any issue involving insurance policies, the claims process should be kept in mind. How do the words of the policy work is always a question claims handlers need to keep in mind and sometimes focus on. Coverage lawyers sometimes see themselves as more than advisors to claims people. Claims managers are often more important in this regard than dogmatic coverage lawyers. 


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Michael Sean Quinn, PhD, JD, CPCU, Etc

Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)

One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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