New York Court of Appeals Recognizes Difficulty of Interpreting Insurance Policies

In early 2016, the New York Court of Appeals heard the case of Selective Ins. Co. of America v. County of Rensselaer, 26 NY3d 649 (2016). The case involved a dispute over the language of an insurance policy between the insurer and the County of Rensselear. After settling a civil class action for the county, the insurer argued that each class member was subject to a separate deductible, while the county argued that there should only be one deductible applied to the class.

In any litigation involving an insurance policy, parties are often left with arguing over language which sometimes seems to be a different language. With that in mind, in two 2016 cases, the New York State Court of Appeals emphasized their process of evaluating an insurance policy.

The primary understanding of the courts is that the terms and conditions of an insurance policy should be construed in the same manner as any other contract. While the approach is similar to any contract dispute, the actual analysis has been proven to be much more difficult on courts when analyzing an insurance policy.

In early 2016, the New York Court of Appeals heard the case of Selective Ins. Co. of America v. County of Rensselaer, 26 NY3d 649 (2016). The case involved a dispute over the language of an insurance policy between the insurer and the County of Rensselear. After settling a civil class action for the county, the insurer argued that each class member was subject to a separate deductible, while the county argued that there should only be one deductible applied to the class. In its decision, the court first determined that like a regular contract, when looking at an insurance policy, they must first look at the plain language of the document. In this analysis, if there if there are any unambiguous provisions, they must be given their plain meaning. The court held that a term is unambiguous if it has a “definite and precise meaning, unattended by danger of misconception.” Therefore, if a term is found to be unambiguous, the court is not able to alter its meaning to promote fairness and equity. Furthermore, in reading the policy the court must construe the document to give meaning to every term. Under this analysis, the court ruled in favor of the insurer that each class member was subject to a single-deductible payment due to the unambiguous meaning of the word “occurrence.”

In May of this year, the Court of Appeals addressed the difficulty of interpreting an insurance policy again in Viking Pump and Warren Pumps v. TIG Ins. , 27 NY3d 244, 257-58 (2016). The case involved litigation between two pump manufacturers to obtain coverage for thousands of asbestos-related lawsuits. Like in Selective the court emphasized that policies should be construed to afford a fair meaning to all the language of the contract, and leaves no provision without effect. However, the court also expanded on this analysis by quoting the 2012 case of Cragg v. Allstate Indem. Corp. , 17 NY3d 118, 122 (2011), in which it stated the policy must be interpreted “according to common speech and consistent with the reasonable expectation of the average insured.” In coming to its decision, the court highlighted that if there are ambiguous terms in the policy, they must be read against the insurer.

While the rules set forth in the mentioned cases are well known to attorneys who litigate insurance policy matters, the New York Court of Appeal’s affirmation of these rules is a clear showing of the difficulties that even courts have in analyzing insurance policies. If you are an insurance company, business, or individual involved in an insurance coverage dispute, it is recommended that you seek an attorney who is experienced in handling these matters.

Since 1950, the law firm of Montfort, Healy, McGuire, & Salley LLP has represented clients in insurance coverage disputes in Nassau, Suffolk, Queens (Long Island), Kings (Brooklyn), New York (Manhattan), Richmond (Staten Island), Bronx and Westchester counties. Our lawyers have experience representing insurance companies and individuals in insurance coverage disputes related to construction accidents, product liability, motor vehicle accidents, premises liability, personal injury defense, medical malpractice, and hospital liability. If you are seeking assistance regarding an insurance coverage dispute, contact us at (800)-240-4082, or fill out our contact form here.

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