- The interpretation of an insurance policy is a question of law for the court;
- Insurance policies will be interpreted in accordance with the plain and ordinary meaning of the words used, particularly words that are not defined in the policy;
- Ambiguities in the policy can only be determined by reading and interpreting the policy as a whole;
- An ambiguity in an insurance policy will be construed against the insurer and in favor of the insured; and
- An ambiguity in an insurance policy construed in favor of the insured means that the ambiguity will be construed in favor of insurance coverage.
These points form the basis of a court’s construction of an insurance policy.
In the Florida Supreme Court case, the Court dealt with an automobile liability policy to determine whether the insurer should be liable for the plaintiff’s attorney’s fees after the insurer made a strategic decision not to accept a proposal for settlement. The insurer had the discretion to settle a case and its insured had to cooperate with its insurer. The policy was ambiguous as to whether the insurer should be liable for the plaintiff’s attorney’s fees after it directs the course of a case and its strategic decision does not work. Based on the ambiguity, the Court held that the insurer was liable for the plaintiff’s attorney’s fees because such ambiguity will be construed against the insurer and in favor of the insured for purposes of finding coverage.
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