Interpretation of the Policy is a concept that allows you to interpret the policy against the insurance company.

If the policy is not clear, then it will be interpreted to benefit you.

Interpretation of the Policy is a concept is not spelled out in your policy. In fact, most insurance adjusters do not know much about it. The reason is simple. A policy is really a contract.

You entered into a contract with your insurance company to pay for any losses or accidents in your behalf (restricted by the terms outlined in the policy) for an exchange of payments (premium). Because this all policies are contracts, concepts and terms that govern contract law apply.

In contract law, an ambiguous term or contradictory terms must be interpreted against the drafter (the party that wrote the contract). In every instance, insurance companies always write their own policies.

I have never seen a person write their own policy and have the insurance company CEO or president sign it. Because of this, the policy terms must be crystal clear. If a term is up for discussion or different interpretations, then it is ambiguous and must be construed to benefit you (the insured). Interpretation of the Policy concepts are not discussed with you because they benefit you.

For example, if your policy extends coverage to your auto and its equipment, and it is silent to any other exclusion. Do not let you insurance adjuster tell you that things not bolted to you car are not part of its equipment. The word equipment means spare tires, keys, jack, some tools, etc. The fact that the insurance company did not define the word equipment, and did not exclude these items bounds them to cover any damage to these parts. Since they are writing the policy, the Interpretation of the Policy concept will protect you.

What often happens is that they exclude coverage somewhere for something, but then they give coverage back (read more on how to read a policy). For example, the policy will read :

�We will not never cover for any damage to sound or stereo systems�

But then three pages later it reads:

�we will cover damage to your radio, electronics, CD or player only in the case of theft�

Your adjuster will probably quote the first clause and call it a denial of coverage. You could show them the second clause. Which one wins? The second clause because the Interpretation of the Policy concept will make sure the police is read against the drafter.

The second reason that they need to rule in your favor when interpreting the policy is the fact that you are an insured. The carrier has an affirmative duty to act in good faith and to do whatever is necessary to act in the benefit of their client (read more in bad faith); therefore, if there is any ambiguity, the adjuster must go in favor of the insured, another reason to read your policy!

The Interpretation of the Policy can help you win a coverage dispute with the insurance company. Remember that you must file a complaint before the Statute of Limitation runs. Read more on Statute of Limitations.