Interpreting Massachusetts Insurance Policies – General Rules of Construction

Insurance policies are complex contracts.  Whether a particular loss is covered or a given exclusion applies often depends on a court’s interpretation of a single word or phrase in a single provision of the policy.  While the court must divine the intent of the contracting parties, that intent is not always clear.  Massachusetts courts are assisted in their interpretation of insurance policies by the following general rules of construction, among others.

• The court’s focus should be on determining the intent of the parties by examining the language of the policy, read as a whole. The objective is to construe the contract as a whole, in a reasonable and practical way, consistent with its language, background, and purpose.
• The interpretation of an insurance contract is a question of law.
• An insured generally bears the burden of proving that a particular claim falls within a policy’s coverage.
• Interpretation of language in an insurance contract is no different from the interpretation of any other contract, and the words of the policy must be construed in their usual and ordinary sense.
• The terms of an insurance policy are interpreted according to the fair meaning of the language used, as applied to the subject matter.
• Every word in an insurance contract must be presumed to have been employed with a purpose and must be given meaning and effect whenever practicable.
• Any ambiguities in the language of the contract are interpreted against the insurer who used them and in favor of the insured.
• If the meaning of the contract language is unclear, a court considers what an objectively reasonable insured, reading the relevant policy language, would expect to be covered (the “reasonable expectations doctrine.”)
• The reasonable expectations doctrine applies, however, only when the policy terms are ambiguous and not when they are clear and unambiguous.
• An ambiguity is not created simply because a controversy exists between the parties, each favoring an interpretation contrary to the other.  Nor does the mere existence of multiple dictionary definitions of a word, without more, suffice to create an ambiguity, for most words have multiple definitions.  A term is ambiguous only if it is susceptible of more than one meaning and reasonably intelligent persons would differ as to which meaning is the proper one.
• However, words that are clear and unambiguous, by themselves, may be ambiguous when read in the context of the entire insurance contract.
• The interpretation of an insurance policy exclusion also presents a question of law.
• The terms of an exclusion are to be construed narrowly.
• Any ambiguity in an exclusion must be construed against the insurer.
• The terms of an exclusionary clause will be upheld when not reasonably susceptible of more than one meaning.

Of course, the relevance of any particular rule of construction may vary depending on the type of insurance policy involved and the kind of provision being interpreted.

The interpretation of an insurance policy always focuses on the language of the contract. The foregoing rules of construction, however, provide guidance which a court may follow when interpreting that language in its effort to discover the parties’ intent.