Although the interpretation of an insurance policy is typically governed by the general rules of contract construction, some rules contain insurance-specific nuances. Each of these rules gives some advantage to the insured, on the theory that the insurer is in the best position to avoid a dispute regarding the policy’s meaning in the first instance.
Of the three rules discussed here, the doctrine of “reasonable expectations” is arguably the most insured-protective rule, triggered by confusing policy language or deceptive conduct by the insurer. Many courts adhere to the notion that exclusionary clauses, on which the insurer bears the burden of proof, should be construed narrowly in favor of coverage. Finally, at some point in the interpretative process, courts in most jurisdictions resort to the doctrine of contra proferentem—automatic construction of the policy against the insurer. These rules may be applied in connection with or after the court makes a determination of ambiguity.