Everywhere I look in my office, I see books, magazines, papers, and screens full of words. From my college books to an old family Bible to my insurance and business books, I’m surrounded by words. I have a laptop with a second monitor attached and both monitors are filled with words. It doesn’t matter if I’m looking at my email (electronic correspondence), my web browser (often showing me Insurance Journal), or my favorite word processor for typing blog posts (you get it). I’m surrounded by words.
Insurance people are very particular about the words that we use. Don’t think so? Really? Go open ANY insurance policy. See that word that’s typed in all capital letters? It’s an adjective telling you that it doesn’t matter what policy you choose, it’ll work. You’ll find a lot of words in even the simplest of insurance policies. We don’t reduce the length of insurance policies over time, either. They just get longer. If you doubt that, look up old property insurance policies. You’ll find that in the 1800’s, a fire policy on a house was a single page document, printed front and back, often with a large section of one side used for the company logo (which were quite ornate back then). That’s it. The whole policy including declarations, insuring agreement, exclusions and all.
With all this discussion about words, you guessed it, we’re going to talk about some important words in an insurance policy. Disclaimer: I did not major in anything related to English, but my college major did include a lot of writing and I’m doing more writing today than ever before in my life. This isn’t meant to be a dissertation on the language, but a commentary on certain types of words that you need to be paying close attention to whenever you’re reading an insurance policy, and really who doesn’t love a good CGL policy for a little light reading?
Pay attention to defined words. Look at that policy you grabbed earlier (what, you thought I was kidding?) and start looking for words in quotation marks. That’s a key sign that the word is defined in the policy. That’s the easiest defined word to find in a policy. I just compared a commercial general liability (CGL) policy with a liquor liability policy and a business auto policy. All three have different definitions of an insured. Go find every word that you find in quotation marks and make sure that you understand how that word is defined in the policy because it makes a difference. The fact that this word is defined in the policy means that it doesn’t have the common definition that everyone else uses. You should also look for words that you see in bold type as a heading in the policy. Those words are often defined in the section that they head. Look up the war exclusion in a CGL policy, or a water exclusion on a commercial property policy.
Pay attention to conjunctions. You think you know which words those are, don’t you? You’re probably right, too, except that there may be more than you think. We all think about the common and easy ones that we sang about when were kids (you know, that cartoon about the train, “what’s your function?”). If you think back to that song, it focuses mostly on our favorite three conjunctions; and, or, but. You have to see those words in the policy. They make a difference. In Florida property policies, Catastrophic Ground Cover Collapse (CGCC) is added as a covered cause of loss. In defining CGCC, the policy provides this (abbreviated) definition: geological activity that results in all of the following: the abrupt collapse of the ground cover; a depression… clearly visible to the naked eye; structural damage…; AND the insured structure being condemned…. That little ‘AND’ is a powerful word. What a difference it would have been had the clause been written with an OR instead. Consider this section from an additional insured form. If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: required by the contract or agreement; OR available under the applicable Limits of Insurance shown in the Declarations; whichever is less. The conjunctions make a real difference in policy language.
Pay attention to adjectives. Thinking back to the days when language was simple, we remember that an adjective describes a noun. It’s the red house. He’s the tall boy. She’s the happy dog. I know, you will not see those adjectives in your insurance policy, at least I don’t think you will. I’ve never seen the word happy in an insurance policy. The CGL policy excludes contracts, except for insured contracts. We just modified the contract to decide to provide coverage for a specific type of contract. By the way, that’s also a defined term with an important conjunction in the definition. Some words in particular that you should watch for include any and all.
Pay attention to ‘if’. I probably should have included this as a conjunction, but that was a really long paragraph already and this word is important enough to merit its own paragraph. When you see the word ‘if’ you are entering an area where there is reduced certainty. It is the beginning of possibilities or doubts. The policy is telling you that there are several possibilities that could be impacted by what is coming next so watch out for the possibilities ahead. “If we defend…” or “if you are designated in the Declarations as…” In the first case, it is possible that the company will not defend against the suit. Since that is a possibility, we have to address it in the policy. In the second case, the policy is introducing a list of possibilities regarding the insured. The way that the insured is identified will change the way that the policy responds to coverage for different people.
Pay attention to pronouns. Mostly, you have to pay attention to where you see ‘you’ and ‘we’. It may seem like common sense, but these pronouns (and all of their variations in the policy) provide for what the insured is responsible for and what the insurance company is responsible for. It’s one of those key words in the policy that we sometimes overlook. As someone once told me, talking about an auto policy, “You always want to be a you.”
What about you? What words in the policy do you think are important to consider? What words have tripped someone up? Let us know in the comments. I can’t promise that I’ll respond to all comments, but I will read them all.