The Underwriter’s Role Against Contra Proferentem

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The doctrine of contra proferentem—literally translated to mean “against the party who proffers”—is a rule of construction that insureds seek to apply in many, if not most, disputes over the interpretation of an insurance policy. Whether in claim-settlement negotiations or litigation, insureds often invoke this rule of construction as if it were an impenetrable position that entitles them to victory if they can conjure more than one interpretation of a policy provision.

Although once a more onerous rule of construction, courts have moved away from the “rigid” approach of construing ambiguous policy provisions against insurers, in favor of a more nuanced approach that considers the insured’s level of sophistication and its role in drafting and negotiating the policy language in determining whether to apply contra proferentem. See Jefferson Block 24 Oil & Gas, L.L.C. v. Aspen Ins. UK Ltd., 652 F.3d 584, 601 (5th Cir. 2011) (J. Garza, dissenting) (quoting U.S. Fire Ins. Co. v. Gen. Reinsurance Corp., 949 F.2d 569, 573 (2d Cir. 1991)). As emphasized by recent court decisions examining application of this “sophisticated insured” exception, the insurer who is mindful of this exception during the drafting and negotiation process can be in a better position to effectively defend against contra proferentem should a dispute as to policy interpretation arise.

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