Exclusions, Exceptions And Limitations
In contrast to the grant of coverage in an insurance policy, exceptions and exclusions to coverage must be narrowly and strictly construed against the insurer and liberally construed in favor of the insured to afford coverage. A contract of insurance is construed most strongly against the insurer and liberally in favor of the insured, particularly where the insurer seeks to deny coverage based upon a policy exclusion. Exceptions, limitations and exclusions to insuring agreements require a narrow construction on the theory that the insurer, having affirmatively expressed coverage through broad promises, assumes a duty to define any limitations on that coverage in clear and explicit terms. Where an insurer grants coverage to an insured, any exclusions from coverage must be defined clearly and distinctly. Exclusions are strictly construed.
Under the rule of contra proferentem, ambiguities in an insurance policy are strictly construed against the insurer and in favor of coverage, under the theory that the insurer drafted the contract. Ambiguity exists when a term, phrase, or section “may be fairly construed in more than one way.” An ambiguity involves a choice between two or more constructions of the contract.
In Georgia Farm Bureau Mut. Ins. Co. v. Meyers, the Court of Appeals explained:
Ambiguity in an insurance contract is duplicity, indistinctiveness, uncertainty of meaning of expression, and words or phrases which cause uncertainty of meaning and may be fairly construed in more than one way. Where a term of a policy of insurance is susceptible to two or more constructions, even when such multiple constructions are all logical and reasonable, such term is ambiguous and will be strictly construed against the insurer as the drafter and in favor of the insured. Where the phrasing of the policy is so confusing that an average policyholder cannot make out the boundaries of coverage, the policy is genuinely ambiguous. Whether or not an ambiguity exists in an insurance policy is a matter of law for the court to decide. In determining whether the terms of the policy are subject to more than one reasonable interpretation, the policy should be read as a layman would read it and not as an insurance expert or an attorney might analyze it. A clause in an insurance policy deemed unambiguous in one situation may be deemed ambiguous when applied to a different situation. “Multiple logical interpretations make a clause ambiguous as a matter of law.” “[I]f a provision of an insurance contract is susceptible of two or more constructions, even when the multiple constructions are all logical and reasonable, it is ambiguous.” “Pursuant to the rule of construction set forth at O.C.G.A. § 13-2-2(5), the contract will be construed strictly against the insurer/drafter and in favor of the insured.” If two clauses in an insurance contract are contradictory, an ambiguity is created, and the clause more favorable to the insured will be enforced.