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Insurance Contract Interpretation: Is Your Policy Fair?

Wed Mar 17th, 2021 on     Insurance Claims,    

Work With an Experienced Miami Insurance Claim Lawyer  

Insurers often deny or undervalue claims on the basis of provisions in the insurance contract that are written ambiguously, or that are written in a way that significantly advantages the insurance company.  As the policyholder, it may feel as though you have been put in an incredibly vulnerable position due to the way that the contract was written.

Fortunately, all is not lost.  Under Florida law, there are a number of mechanisms through which unfair or ambiguous insurance contracts can be interpreted in your favor (as the policyholder).

If you believe that your insurer is incorrectly interpreting the policy, or has created a fundamentally unfair policy, then you may be entitled to challenge that — but you’ll need the assistance of an experienced attorney to navigate the dispute effectively and put forth an effective legal argument.  Here at Ver Ploeg & Marino, P.A., we encourage you to contact a skilled Miami insurance claim lawyer at our firm for guidance on how to proceed.

Let’s take a closer look.

Ambiguity is Interpreted in Favor of the Policyholder

In Florida, ambiguous contract provisions — including provisions in insurance contracts — are interpreted in favor of the policyholder.

How does this work?

Suppose that you have signed onto health insurance coverage that has an extremely vague definition of “medically necessary.”  If your insurer refuses to cover a particular treatment on the basis that your treatment was not medically necessary, you might be able to argue that your interpretation of medically necessary is reasonable given the language of the insurance contract.  Assuming that you and the insurer have an equal amount of supporting evidence for your interpretations, a Florida court is required to favor your interpretation.

In other words, you — as the policyholder — are favored to win any “tiebreaker” in the context of contract interpretation.

This creates a dynamic that gives policyholders a substantial advantage when challenging adverse decisions made by their insurer.  Insurers who deny claims based on vague coverage exclusions may be challenged by their policyholders, who can more effectively argue that their interpretation of the ambiguously-written exclusion is correct.

As policyholders are advantaged, they have the power to exercise leverage during early negotiations.  Insurers are well aware that an ambiguously-written provision is more likely to be interpreted in favor of the policyholder — and as such, if you put forth a strong argument with supportive evidence, they are more likely to settle the claim and pay out the benefits that you demand.

Unconscionable Insurance Provisions

Under Florida law, unconscionable provisions in an insurance policy cannot be enforced.  An unconscionable provision is one that is fundamentally unfair.

There are multiple forms of “unconscionability:

  • Procedural unconscionability, which involves the lack of a meaningful choice at the time that the contract was entered, or may involve a significant difference in bargaining powers between the two parties, and
  • Substantive unconscionability, which involves provisions that themselves advantage or favor one party over another in an unreasonable manner.

Simply put, procedural unconscionability centers around fairness in the negotiation of the contract (i.e., the insurance policy), while substantive unconscionability centers around fairness in the policy provisions themselves.

Courts Can Modify Unconscionable Insurance Contracts

In the event that a court finds that a particular provision of the insurance policy is unconscionable, they are entitled to modify the contract and change it to make the policy fair under the law.

This can be difficult to understand, so let’s use a brief example to explain.

Suppose that you have a homeowner’s insurance policy in which the contract prohibits you from obtaining a neutral third-party appraisal of the damage for submitting your claim.  Instead, you are required to accept the appraisal amount given by the insurer.  The courts would likely find this unconscionable, as it unreasonably favors the insurer over the policyholder (you).  It flies in the face of fundamental fairness.

Given this unconscionable provision, a Florida court would then be empowered to modify the contract to remove the prohibition on third-party appraisals.  Assuming that the provision could be removed without interfering with the rest of the contract, this modification would allow for the policy to continue as-is (excepting the removed provision).

In cases where the entire contract is deemed unconscionable, or where a modification would be insufficient to remove the unconscionable elements of the contract, a Florida court may choose to invalidate the entire policy.

Contact a Miami Insurance Claim Lawyer for Assistance

Ver Ploeg & Marino, P.A. is a Miami-based insurance litigation firm, with a focus on providing client-oriented legal representation to insurance policyholders.  We are committed to achieving significant results when insurers deny claims or otherwise refuse to play fair — whether through administrative challenges, settlement negotiations, or trial litigation.

Over the years, our team has developed a trial-ready approach to navigating insurance disputes.  This preparedness allows us to exercise leverage during negotiations, often securing a favorable settlement at an early stage (before the case goes on for too long, costing additional financial and emotional resources).

In Florida, ambiguous insurance contracts must be interpreted in favor of the policyholder.  As such, even if you feel overwhelmed by your insurer’s hostile and adverse position, it’s important to remain cool and collected — with the assistance of an experienced attorney, it may be possible to have the contract interpreted in a way that benefits you.

If you’d like to speak to a seasoned Miami insurance claim lawyer about your dispute, we encourage you to contact us to schedule a consultation at your earliest convenience.  We look forward to speaking with you.

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