Posted On: December 8, 2004, 12:08 pm CST

Posted By: Nuke

So far, Frank's still got it the most right in understanding the intricacies in this incredibly complex situation.

JTM, you fall into Frank's simplistic category when you state the crux of this dispute is your "...observation that ambiguity (in a policy form) is always settled in favor of the insured". That has truth in a historical context, but much more so in personal rather than commercial lines, and in earlier times rather than the more recent past.

First, the use of a manuscript policy instead of a more standard form erodes many, if not most, of an insured's argument of being at a disadvantage in the policy-drafting process. In fact, even if the drafter of the manuscript policy is the corporate insured's broker (and not its own attorneys), all the knowledge and expertise of the broker can be imputed to the insured, weakening its assertions of being at the mercy of the insurance company.

Further, for the past 20 years or so, courts have increasingly relied upon a doctrine called the "sophisticated insured exception" when the parties are on a much more level playing field, as in the case of large commercial insurance transactions. It recognizes that both parties have the finacial resources to employ cadres of lawyers and contracts people and therefore, are in more or less equal standing in an arm's length negotiation.

And that's just one reason why the "simple answers" being offered up don't apply here. And also why a few lucky attorneys will be upgrading their estates in the Hamptons in a couple of years!