Randy Maniloff has written a really useful article called Coverage Litigation and the Magic 8-Ball, about the difficulties of predicting the outcome of coverage disputes. This article analyzes something that may not sound exciting, but is actually one of the most philosophically challenging aspects of coverage law: rules of insurance contract interpretation and the process of how courts make their decisions.
As Randy points out, despite the fact that the policy and policy terms are the origin and most important aspects of coverage law, policy language doesn’t really mean anything until courts have interpreted it, and there is a lot of coverage litigation. What I like to say is that coverage litigation is the Great Laboratory of the Common Law. Forget about statutes, forget about drafting policies, insurance law is being created right before your eyes in the Katrina cases I discuss daily.
However, despite a mass of case law on many issues, it is surprising how vague, poorly written, incomplete, idiotic or unhinged many coverage decisions are. Often, it appears the person writing the opinion was as unsteady with the subject as a kid on her first bike ride. Courts also vary their approaches to insurance contract interpretation from state to state or frequently, from judge to judge. Randy’s article is a useful look at all these issues.
Sidenote — someone asked me not long ago what I’m going to do after coverage law peters out. This question was based on the assumption that, because many insurers have merged, there must be fewer coverage cases. Take a look around, there are more insurance products, more insurance being bought and sold than ever before in the history of Earth. Just based on that alone, there are going to be more coverage disputes.