On behalf of Faricy Law Firm, P.A. posted in blog on Thursday, September 7, 2017.
Have you ever read any of your insurance policies word for word? Have you taken the time to look beyond the summary of your coverage? If you do, you may find a section containing definitions of certain words in your policy.
You may think you know what those words mean, but these definitions often go beyond what you learned from a dictionary or in school. Don't risk receiving a denial to a claim because you didn't know what a word in your policy meant.
What key words should you look for in your policy and where are their definitions?
Most insurance policies identify key words by highlighting them with italics or in bold, or putting them in quotation marks. These words will most often be part of the definitions section of your policy.
Be sure to check for multiple definition sections if you have a bundled policy. For instance, many people have one policy that covers their auto insurance, and renters or homeowners insurance. In this case, each type of coverage may have its own definitions, along with a section for common words that are in both types of coverage.
Watch out for definitions that could be in other parts of the policy. In many policies, the term "you" means the insured. This definition may be elsewhere in the documentation.
Why do these terms require explicit defining?
When an insurance company wants to limit the scope of its coverage, it does so by specifying the meaning of a word. In this way, it can prevent broader interpretations when you file a claim. For example, you may find separate definitions for mobile vehicles versus automobiles. Certain coverage may apply to each but not to both.
If your policy contains certain exclusions, some definitions may be necessary to make those clear. Definitions pertaining to exclusions may be in those sections and not in the definitions section of your policy. Some definitions exclude a category of people or things. For example, the policy's definition of employee may not include seasonal or temporary workers specifically.
You and your insurance company may disagree upon words that do not have specific definitions if you make a claim. It could be up to a Minnesota court whether your interpretation is the correct one.
What if you disagree with the insurance company's definition?
What happens depends on the specificity of the definition. If there are more than one reasonable definitions of the word and the policy does not choose one, courts tend to rule in favor of the insured – you -- when it comes to these ambiguous definitions, because you did not have the opportunity to weigh in on what the term would mean when you accepted the policy.
This may seem simple enough, but don't take going up against an insurance company lightly. If you believe the company denied your claim due to the definitional interpretation of a word, you may need outside help in order to determine which of you is right. A significant amount of money may be at stake, so it may be to your benefit to enlist some experienced guidance and help.