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Have an Insurance Claim? Know your Latin.

The phrase is Contra Proferentem. It is Latin for "against the offeror." The doctrine of contra proferentem essentially holds that any ambiguous contract terms should be construed against the drafter. See, the insurance contract is a contract of adhesion. It's a one sided contract drafted by the lawyers of the insurance companies, and it is offered on a take-it-or-leave-it basis. The consumer purchasing an insurance policy doesn't have any say on how the contract language ought to be. Herein lies the problem, and hence the doctrine.

Insurance contracts are ambiguous at best-have you ever tried to read your auto insurance policy? When a policyholder has a claim, and coverage is not black and white, the insurance adjusters sometime hide behind the ambiguous policy language and deny the claim. I see this all the time, and I call this a Bad Faith denial. I will tell you why. Many states have consumer protection laws based on the doctrine of contra proferentem, and there is ample case law that essentially holds that in cases of uncertainty the language of an insurance contract should be interpreted against the insurance company. Yes, AGAINST the insurance company! However, policyholders simply succumb to the devil in the details, and treat the three page long claim denial letters as part of their bad luck.

I recently had an incident where the storefront window of my client's business was broken by vandals. She rents the space from where she operates. As she doesn't own the building, and for that matter the windows, we sold her the necessary endorsements to cover the glass in such an instance. The insurance company, however, denied the claim. They came up with some convoluted reasoning that was based on how they read the policy on that day. I then helped my client shove some fear of a breach of contract claim, and proclaim contra proferentem. The claim was paid.

Next time you have an insurance claim, and you have a reasonable expectation of being paid based on your interpretation of the policy, then you do the same if your claim is denied.

Carpe diem.

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