Coverage Determination and Policy Interpretation
Method
Coverage is analyzed in layers: (1) is there an insuring agreement trigger such as occurrence, accident, property damage, bodily injury, or a claims-made reporting trigger? (2) do the definitions include or exclude the item? (3) does an exclusion remove it? (4) does an exception to the exclusion restore it? (5) do conditions such as notice, cooperation, or suit limitation bar or reduce? (6) do endorsements alter the result? Specific wording beats general, handwritten beats typed, endorsements beat the base form, and definitions beat ordinary meaning.
Causation problems
With concurrent causation, a covered and an excluded peril combine. Many jurisdictions apply efficient proximate cause, so the dominant cause controls; others enforce anti-concurrent-causation clauses literally. Distinguish damage to the product itself from resulting damage to other property. The duty to defend is broader than the duty to indemnify and is triggered by potential coverage.
Traps
- Starting with exclusions before finding the insuring agreement.
- Treating "occurrence" as any event, ignoring the accidental or fortuitous element.
- Missing that an exception to an exclusion restores coverage.
- Concluding a claim is covered because the insured expected coverage.
- Ignoring a claims-made policy's retroactive date or reporting deadline.
Rule of thumb
Write coverage as a chain: trigger, definition, exclusion, exception, condition, endorsement. Cite the form and page for each conclusion.
Worked example: A contractor's faulty work damages the building's interior. The policy excludes damage to "your work," but that exclusion typically does not reach damage to other property. Interior damage may be covered while repair of the defective work is not; document the split and reserve rights.