Coverage

The merit of interpreting coverage provisions broadly and coverage exclusions narrowly.

It promotes the adhesion rule that the contract will be interpreted against the drafter. The contract drafter should know what their coverage and exclusions should be as it applies to their insured. Interpreting coverage broadly and exclusions narrowly would protect the consumer from undue advantage by the insurer if they deliberately left definitions or meanings obscure to enable a denial of claims. They can’t leave any “wiggle” room in the contract or leave room for interpretation without injuring their insured as the drafter will likely protect their interests. 

Practically speaking, interpretation will always be debated by insurance defense, and thus the adhesion rule plays an essential part in contract interpretation. The merit of interpreting coverage provisions broadly is that it creates coverage for the insured to be protected against wrongful denial of claims. The same thing goes for exclusions as it is trying to generate coverage for the insured. Insurance defense attorneys would argue that this policy serves as a chilling factor because it “retards industry and dissuades the carrier from putting untested language into the contract.” Market principles would argue otherwise, as the insurance industry realizes record profits.