People have insurance policies to protect them when things go wrong, whether it’s a car accident, a fire or some other event that causes damage and/or injury. When filing a claim, however, policyholders learn an unfortunate truth: insurance policies are written using technical language that can be difficult for the average person to understand.
Some insurance companies purposely use ambiguous policy wording to delay or deny valid claims. When a term has more than one meaning, the insurer may choose to interpret it in a way that favors them. Is it a legal, albeit unfair, loophole, or is it bad faith insurance?
What makes a term ambiguous?
A policy term is considered ambiguous if reasonable people can interpret it differently, and the insurer didn’t provide clarity. In Washington, if a policy term is vague, then it must be interpreted in the policyholder’s favor. Insurers know this, but some will still try to use unclear language to deny claims.
Some common ambiguities that insurers try to exploit include:
- Vague exclusions, such as “wear and tear,” “earth movement” or “neglect.” Left undefined, insurers can broadly apply them to the current situation
- Undefined limitations like requiring the insured to take “reasonable steps” to protect their property, but not providing clarification
- Conflicting provisions in different sections of the policy. One section appears to provide coverage while another says it’s excluded
- Unclear time frames in phrases like “prompt reporting” can be used to argue that a claim is late.
Insurers have a legal duty to act in good faith towards their policyholders. By twisting policy language to avoid paying a valid claim, they cross the line into bad faith. Relying on vague exclusions or using selective language to disregard a provision that supports coverage are examples of an insurance company acting in bad faith.
It’s frustrating when an insurance company twists policy language to deny or underpay your claim. But you have options, such as contacting a legal professional who can review your claim and the insurer’s denial. They can identify bad faith tactics and help you get the coverage for which you have paid
