热点黑料

In the 1990s, I co-wrote a seminar with the late, great John Eubank, CPCU, ARM called “How to Battle an Adjuster … and Win Every Time!” Later, I changed the name to “How to Win Friends and Influence Adjusters,” but that’s a story for another time.

One segment of the seminar addressed what John referred to as “weasel words.” These are words or phrases in insurance policies that may be cited to deny a claim but the terms are not defined in the insurance contract and, in the eyes of many courts, could be considered ambiguous.

Examples of such words include “auto,” “arising out of,” “care, custody and control,” “equipment,” “firearm,” “infestation,” “household,” “in connection with,” “likely,” “on ways next to,” “ownership,” “permanent,” “personal,” “public or livery conveyance,” “reside,” “theft,” “use,” “vacant,” “vandalism,” “vermin,” and the list goes on and on and on.

I address these words and terms in depth in my book, “When Words Collide: Resolving 热点黑料 Coverage and Claims Disputes,” a product that evolved from this series of seminars that John and I did for over a decade. A few examples are provided below.

Tergiversation

At one seminar, an attorney said that these words were examples of “tergiversation,” a term I had to look up at the time.

The definition he had in mind was from the Oxford Advanced Learner’s Dictionary:

• Tergiversation, noun
• the act of making statements that deliberately hide the truth or that avoid answering a question directly.

In his opinion, insurers intentionally use ambiguous language in drafting insurance contracts to give them a way out on some claims.

Weasel Words

On another occasion, I was discussing a cyber policy with a consultant who was similarly convinced that insurers were purposely writing cyber coverages using “weasel words” in a way that the language could be interpreted in any way they chose.

According to Wikipedia, a “weasel word” is an informal term for a word or phrase “aimed at creating an impression that a specific or meaningful statement has been made, when instead only a vague or ambiguous claim has been communicated.”

In my “When Words Collide” book, I give examples of “weasel words” that represent a special class of lexical (semantical) words or phrases that are almost inarguably ambiguous. The examples I provide are from actual claims that were initially denied but then paid after being challenged.

For example, a nonstandard homeowners policy excluded damage to “farm-like” structures. A two-story storage building painted red with what looked like a hay loft window and a rooster weather vane on the roof burned to the ground. The adjuster initially denied the claim, citing the “farm-like” language, despite the fact that the structure was not used in any way to store farm products or equipment or to house farm animals. So, what exactly made the structure “farm-like”? The adjuster couldn’t answer that question other than the building looked kind of like a barn. To his credit, he backed off the denial and paid the claim.

Another homeowners claim involved fire damage that was covered in part but not, according to the adjuster, the damage to a freezer. The adjuster based the denial on policy language that indicated that it only covered damage to personal property “usual to the occupancy as a dwelling.” What property do you usually find in a dwelling? One might argue that freezers aren’t common but what about other appliances?

My brother owns an expensive telescope … is that not covered because you don’t usually find one in most dwellings? If someone in Florida owns a pair of snow skis, are they not covered because they are not “usual to” dwellings there, but would be usual if the home was in upper Michigan?

Returning to my aforementioned conversation with a consultant about a cyber policy, the one in question excluded coverage for system hacking if the insured’s security systems were not up to “industry standards,” a term not defined in the policy.

What or which “industry standards?”

Some policies cover theft “when it’s likely that theft has occurred.” What determines that a loss was likely theft?

Does residue from an abandoned meth lab constitute vandalism under a landlord’s policy? Does such damage have to be intentional?

How many bats must be in an attic before the damage they cause arises from an “infestation?”

Does an auto policy’s “public or livery conveyance” exclusion apply to pizza delivery?

So, does an insurer’s use of so-called “weasel words” constitute tergiversation? In other words, is the use of vague, undefined terms done on purpose? Some people believe so, but I find that highly doubtful. I’d like to think that, more often, poorly worded policy provisions simply represent the insurance contract drafters’ lack of skill or experience, or the terms used were chosen simply because the drafter couldn’t think of anything better. After all, who wants a 100-page policy of which 88 pages constitute nothing but definitions. Even if that was the case, definitions themselves are often found to be ambiguous.

The Key Word

Ambiguous is the key word here. Litigating insurance contract verbiage is a crap-shoot for both parties. No one wants to spend potentially several years in the court system to find out if a word or term is ambiguous.

In addition, if a term is found to be ambiguous, the policyholder wins almost every time, and such decisions may impact hundreds or thousands of prior and future claims on accounts for which the premium possibly did not reflect the coverage found by the court. That doesn’t provide much motivation for insurers to deliberately use ambiguous terms in policies.

All of this being said, it’s advisable that agents and policyholders read the insurance contracts they’re selling and buying, and ask interpretive questions in advance of claims, keeping in mind that what these terms mean may be dictated by the facts and circumstances of each individual claim.

As always, RTFP! and ask questions.