Contract Interpretation and the World Trade Center
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A Video Explaining the Doctrine of Reasonable Expectations
\\n\\nThe act of infamy at the World Trade Center (WTC) in New York City on September 11, 2001, is responsible for a great deal of insurance litigation concerning, among other things, the meaning of the term \\u201coccurrence\\u201d in first party property policies and the methodology required of insurers when interpreting a policy of insurance. In the WTC policies, \\u201coccurrence\\u201d was defined as follows: \\u201cOccurrence\\u201d shall mean all losses or damages that are attributable directly or indirectly to one cause or to one series of similar causes.
\\nAll such losses will be added together and the total amount of such losses will be treated as one occurrence irrespective of the period of time or area over which such losses occur. Because WTC insurance issues are surrounded by the horrendous facts of the attack, and due to the fact that some policies had yet to be printed and delivered to the insured before September 11, 2001, the decisions rendered in interpreting the policies had far-reaching impact. The rulings in the WTC cases, combined with a decision of the California Supreme Court, are changing how insurance policies are interpreted. Since policy interpretation is essential to the presentation of any insurance claim, the following detailed discussion is important to all those concerned with insurance claims.
\\n\\u201cReasonable expectations\\u201d does not mean, however, that the expectations of the insured can change or modify the clear and unambiguous language of the policy of insurance. The Third Circuit found, in Canal Insurance v. Underwriters, against the insured\\u2019s claim of reasonable expectations, finding that in the context of the case before it \\u201cthe refusal to look beyond the plain meaning of the unambiguous exclusionary language to Singh\\u2019s reasonable expectations is consistent with the interpretation of Pennsylvania case law in our Circuit.\\u201d For example, a case decided over 200 years ago made the point that the reasonable expectations of the insured include the understanding that \\u201cevery [insurer] is presumed to be acquainted with the practice of the trade he insures\\u2026. If he does not know it, he ought to inform himself.\\u201d Similarly, more than 150 years ago the US Supreme Court in Hazard\\u2019s Administrator v. New England Marine Insurance Co., 33 U.S. 557 (1834) adopted the rule. It concluded that \\u201cno injustice is done if insurers are presumed to know their insureds\\u2019 industry because it is part of their ordinary business.\\u201d
\\n\\xa9 2021 \\u2013 Barry Zalma
\\nBarry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.
\\nHe also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.
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