Insurance Policy Interpretation

Here is an opinion from the Fort Worth Division, Northern District of Texas, that discusses insurance policy interpretation.  The opinion is styled, Suzann Ross v. Hartford Lloyd Insurance Company.

Ross had homeowners insurance coverage with Hartford and suffered a windstorm loss.  Ross made a claim for benefits and Hartford adjusted the claim and paid the amounts it believed it owed under the policy.  The main dispute was whether the roof damage needed to be totally replaced or just a portion replaced.  Ross sued Hartford and Hartford filed this Motion For Summary Judgment on her claims.

The relevant policy language reads in pertinent part:

COVERAGE A (DWELLING)

We insure against all risks of physical loss to the property described in Section I Property Coverage, Coverage A (Dwelling), unless the loss is excluded in Section I Exclusions.  Coverage A (Dwelling) provides:  We cover the dwelling on the residence premises shown in the declarations page including structures attached to the dwelling.

Texas law of contract construction governs in cases such as this one.  Texas insurance contracts are subject to normal rules of contract construction.  The contract language is construed according to the ordinary, everyday meaning of the words to the general public.  The focus is to ascertain the parties intent as expressed in the policy.

Whether a contract term is ambiguous is determined by the court as a matter of law.  Under the law, a term is ambiguous only if it is susceptible to more than one reasonable meaning, and mere disagreement between the parties about the correct interpretation of the term will neither render it ambiguous nor transform the issue of law into one of fact.

What is different with ambiguous language in insurance contracts is that insurance policies are analyzed with a presumption in favor of coverage.  When it happens that a term is ambiguous, the court will construe the term in favor of the insured.  When a court is construing a policy term that excludes or limits coverage, a court must adopt any reasonable interpretation of the exclusion urged by the insured, even if the interpretation provided by the insurer appears more reasonable or a more accurate reflection of the parties intent.

This opinion then spent time discussing the policy meaning of “physical loss.”   A reading of the case will get into how this Court handled that term.  What is relevant here is understanding how the courts handle or should handle insurance policy interpretation disputes.