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Insurance Policy Exclusions: Am I Covered?

Posted on: December 12, 2022

Chi Hung Nguyen
December 12, 2022

Insurance Policy Exclusions: Am I Covered?

Find an experienced personal injury lawyer who can help guide you through insurance exclusions

Insurance claims and personal injury lawsuits are adversarial – it can be fight between the injured person making the insurance claim and the big insurance company. The injured claimant or person with insurance seeks compensation for the injuries and damages that they have suffered. Meanwhile, the insurance company considers the claim and investigates the damages, or the insurance company will reject the claim because of policy exclusions or policy defenses.

In many cases, policy exclusions and defenses are just words on the pages of insurance contracts. But these words can make or break your personal injury lawsuit.

In everyday life, our words typically have a plain and clear-cut meaning. But in the world of insurance and legal terms, the same word can have a lot of different meanings, or interpretations, that depend on how they are used and each case’s unique situation.

Sometimes, the insurance company wants a specific word to have a particular meaning. But they cannot assign a specific meaning without making it official. Usually, when the insurance company wants to give a word a specific meaning, then that word is given its official meaning and definition as it is set out by the insurance policy contract. Typically, the insurance policy contract has a section about the definitions of the words the insurance company wants to have a specific meaning.

Each state has different laws. Insurance policies are contracts that are understood according to the state’s laws. When the insurance company assigns a clear meaning or definition for a particular term, the court is likely to side with the insurance company. When that word or term is not clear, the court looks at the information and evidence to see what the people who are a part of the contract intended for the word to mean.

For example, the term “medically necessary.” In everyday language, this word means what is needed for medical, or health reasons. But some insurance companies do not define this term on purpose. That way, the insurance companies can decide what is really absolutely needed for medical treatment after a particular car accident or truck accident happens after the fact. A personal injury lawyer will consider evidence and medical treatment, and may hire an expert to determine what is “medically necessary” for your case. This process may involve intensive research, collection of all relevant files, depositions and more.

Another example of a common insurance policy contract term is “occurrence.” Usually, for auto insurance policies, the occurrence that triggers insurance coverage is a car accident. As discussed above, each state and court system interprets the meaning of laws differently. In one 1986 case, Royal Globe v. Whitaker, the court said that the person making the claim has to prove that a particular incident is covered, and that to get insurance coverage, the claimant needs to prove that the incident was accidental and not on purpose.

The person with insurance and making an insurance claim will need to prove that a qualifying incident, like a car accident, an occurrence happened. It would also have to be shown that the specific incident is an exception to a rule, if this happens.

Then, the insurance company has to evaluate and investigate the claim. If the insurance company thinks a particular incident is not covered under how they defined a term, the insurance company has to prove why the specific incident is excluded. This also means that the insurance company needs to provide a certified or verified copy of the insurance policy exclusions document file, otherwise they cannot claim that a person cannot make a claim under that exclusion. Put simply, the insurance company just tell you that the claim is excluded, they need to prove it.

If the insurance company is not sure about all of their rights under the wording and language of the insurance policy contract, then they will likely send out a reservation of rights letter to try to cover anything they may have missed. Some defenses are waived, or given up, only after a certain action (or inaction) by the insurance company. Rely on the advice of a personal injury lawyer with the knowledge and skills to understand the ins and outs of your case.

Not every single word in an insurance policy contract have to be defined. If the meaning is standard within the insurance and legal industry, it will likely be that commonly used meaning.

An insurance policy can cover multiple people or properties. In some standard insurance forms, the policy terms and benefits apply to each insured person individually. But, each person shares the total amount of coverage limits. This means that even though each person is covered by the same insurance policy benefits, they will have to divide, or share the total amount of coverage limits.

In one case, West American Insurance Co. v. AV&S, Inc., a pizza company’s driver hit a pedestrian. The insurance company denied the claim of the injured claimant. Then, the injured claimant sued. The court looked at the wording of the insurance policy, and decided that the insurance company should not have denied the claim because the contractual language surrounding the term “any insured.” An “insured” is generally the person or entity covered by insurance. Here, the insurance company tried to argue that the driver and the corporation are both technically “insureds,” but do not receive the same level of coverage. The court rejected this argument. The insurance policy in this case had an exclusion clause and other contract language that the court interpreted to mean that coverage for one insured applied to all insureds, whether it was the driver or the corporation. The court decided that the exclusion clause does not exclude coverage for all insureds even when there is only one insured is at fault, and the insurance company should have paid the claim.

Contractual Liability Exclusion

There is also a difference between bodily injury and property damage liability, and liability under the contract. There are many types of damages. Bodily injuries are exactly what they seem to be – injuries and harm that impacted your health and well-being. In car accidents and truck accidents, property damage is usually the cars that were struck by the at-fault driver. It can also be other property damage, like damage to buildings. On the other hand, liability under a contract is when someone signs an enforceable contract and then breaches the contract by doing something they were not supposed to do, or failing to do something they needed to complete.

In most vehicle accident cases, the insurance policies involved cover bodily injury and property damage liability, but not contract liability. This is a type of insurance policy exclusion. Usually, this results in excluding any claims that are fall under bodily injury and property damage, even if there is some overlap with a claim for breach of contract. Another contract exclusion applies and allows an insurance company to deny a claim when one insured person’s insurance covers another, such as coverage of a subcontractor’s insurance company of a general contractor.

Types of Insurance Policy Exclusions:

There are a lot of different types of insurance policy exclusions. Not every insurance company uses the same exact policy, even if there is a standard form. Notably, there are many that include those that deal with:

  • The kind of injury and whether it is kind of injury covered,
  • Contractual liability (discussed above),
  • Pollution, such as hazardous substances released that cause harm or damages,
  • General liability insurance exclusion of vehicles,
  • War, which is usually more than civil disturbances,
  • Property damage caused by the insured to the insured’s own property, instead of caused by an outside person or thing,
  • Damage caused by poor work product made by the insured, or the contractor, and
  • Damage caused by doing business where you were not allowed to do business, such as at home.

Policy exclusions are just one of many tactics and defenses that an insurance company has at its disposal. In cases where liability is clear, settlement may be the best option, but settling a case requires bringing in all of the right parties involved and understanding the insurance policy language.

Navigating the legal terms, understanding the their meanings and using them to work in your favor requires knowledge from an experienced personal injury lawyer.

Contact an experienced personal injury lawyer 

Without experience in the insurance industry or legal experience, understanding which factors or evidence can help or hurt your case can be difficult to understand.

Are you trying to secure your financial recovery with the help of experienced attorneys? If so, we can help.

The Pusch & Nguyen Law Firm has helped countless Texans handle their insurance disputes. Our experienced trial lawyers have gone up against some of the biggest names in the insurance industry while successfully bringing home payouts for clients. Our successful reputation speaks for itself, and with offices in both Houston and San Antonio, we are well equipped to assist Texans who are in dire need of our services. Register online for a free case evaluation or call us today at 713-524-8139 (Houston) or 210-702-3000 to schedule an appointment with a member of our team.


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