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Rules of Contract Interpretation   

https://zalma.com/blog

The following rules govern the construction of contracts of insurance:  If the terms of a promise are in any respect ambiguous or uncertain, it  must be interpreted in the sense in which the promisor believed at the  time of making it, that the promisee understood it. [California Civil  Code \\xa7 1649] (which provides an excellent definition of the basic rule  of interpretation followed in most states).  

\\u201cIf a written contract is so worded that it can be given a definite or  certain legal meaning, then it is not ambiguous.\\u201d  However, if \\u201cthe language of a policy or contract is subject to two or  more reasonable interpretations, it is ambiguous.\\u201d Simply stated, all  contracts are interpreted equally except insurance contracts, which are  interpreted to favor the insured in the event of an ambiguity.  An insurer may not rely on an ambiguous interpretation of a policy  provision that, if construed as the insurer contends, would deprive the  insured of coverage.  When the language of an insurance contract is reasonably susceptible to  two constructions, it should be construed in favor of the insured.  It is not necessary to show that the construction against the insurer is  more logical than that against the insured; it is sufficient to show  that the construction in favor of the insured is equally reasonable with  that which favors the insurer.  

\\xa9 2021 \\u2013 Barry Zalma  Barry 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.  He 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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