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Clear Language Wins the Day: Court Rules Ambiguity Favors Policyholders

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May 13, 2025 by Chip Merlin, Merlin Law Group

Clear language in insurance policies matters. When insurers draft ambiguous provisions, courts are required to interpret them in favor of policyholders. A recent Fourth Circuit ruling in favor of JW Aluminum proves just that.

The case centered on a $35 million loss, with insurers attempting to cap coverage at $10 million under a vague “Molten Material” provision. But the court saw through the ambiguity, reinforcing a fundamental rule: Unclear policy language works against the insurer—not the policyholder.

This decision is a major win for policyholders and public adjusters alike. Learn why challenging vague policy terms is essential—and how courts continue to protect insureds in disputes like this.

In a recent decision that offers crucial guidance to policyholders and public adjusters about how to interpret commercial insurance contracts, the Fourth Circuit Court of Appeals sided with the policyholder, highlighting a key lesson about insurance policy interpretation: When insurance language is ambiguous, courts will interpret any ambiguity in favor of the policyholder. 1

Check the Credentials of Experts

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Water Backup is Not Surface Water

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Dec 22, 2023 By Chip Merlin

INDUSTRY PROFESSIONALS

Tags: FC&S Bulletin, Flood, National Underwriter

Christine G. Barlow, CPCU Executive Editor FC&S

What does the insurance industry mean by the term “surface water?” Where does a public adjuster find insurance industry information about a term of art in an insurance policy? There are a number of insurance industry sources that should be regularly used for reference and read by property insurance professionals to keep up on new information.

One is the FC&S, which is now part of ALM’s PropertyCasaulty360. An article they posted, Water Backup Is Not Surface Water, posed a situation where a carrier was denying a water damage claim where the policy contained a water backup endorsement. The policy stated it would pay for:

Are Your Roof Claims Being Properly Handled by State Farm in Good Faith? The State Farm Shingle Locator Service (aka RLS)

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By Chip Merlin on December 5, 2023
Posted in State Farm

Are you a policyholder, insurance restoration contractor, or public adjuster dealing with a roofing claim adjustment involving roofing shingles with State Farm? Have you asked the State Farm adjuster for the process explaining how the adjuster is handling the claim? Why wouldn’t State Farm provide and publish the honest methods it uses to adjust these claims with its customers if you asked for them?
I say this because I was sent a Shingle Locator Service protocol and critique of the same, which stated the following:

INSURANCE CLAIM DELAYS DELIVER MASSIVE PROFITS TO INDUSTRY BY SHORTING CUSTOMERS

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By
Mollie Reilly and Max J. Rosenthal
13/12/2011 10:24pm GMT | Updated December 13, 2011

WASHINGTON -- Unlike many other businesses, the insurance industry is bound by law to act in good faith with its customers. Because of their protective role in the lives of ordinary citizens, insurers have long operated as semi-public trusts. But since the mid-1990s, a new profit-hungry model, combined with weak regulation, has upended that ancient social contract.

"Claims has been converted into a money-making process," said Russ Roberts, a New Mexico-based management consultant and former business professor at Northwestern University who has studied the insurance industry's evolution from a service business to a profit-driven machine.

Court Rules in Favor of Goodwill on COVID-19 Business Interruption Matter

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By Daniel Veroff, Merlin Law Group, on January 30, 2021

POSTED IN COMMERCIAL INSURANCE CLAIMS

We are happy to share with the insurance world a very positive development on COVID-19 Business Interruption cases – from Orange County, a conservative jurisdiction. The credit for this victory goes to our friends at Covington & Burling LLP, who we have been working closely with to advance justice for policyholders. A special shout-out is owed to David Goodwin and Jad Khazem for this win, as the specific allegations of physical alteration were the driving force behind the victory and are instructive for future success.

Legislation for Covid Closes Business Poicyholder

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Will Recently Filed Federal Legislation for the Covid Closed Business Policyholder Have A Possibility Of Passage?

Coronavirus Claims: The Business of Business Interruption

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Coronavirus Claims: The Business of Business Interruption.

by J. Remington Huggins, Huggins Law Firm, LLC

Today’s world is mired in uncertainty. The novel coronavirus, named COVID-19, has frozen economic activity on an unprecedented scale. As a result, many businesses are facing severe economic concerns. My goal is to provide the everyday business owner with a sense of direction in this tumultuous time.

Potential Insurance Coverage/Claim Issues from Covid-19 Outbreak

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Potential Insurance Coverage/Claims Issues & Options for Losses Stemming Directly or Indirectly from the COVID-19 Outbreak
By Brandon Lewis, CEO, Strategic Claim Consultants

Georgia Insurance Dept. Touts 2019 Work for Consumers, Agents

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Georgia Insurance Dept. Touts 2019 Work for Consumers, Agents

January 28, 2020

Online

Clear Language Wins the Day: Court Rules Ambiguity Favors Policyholders

Check the Credentials of Experts

Check the Credentials of Experts!

Water Backup is Not Surface Water

Dec 22, 2023 By Chip Merlin

Are Your Roof Claims Being Properly Handled by State Farm in Good Faith? The State Farm Shingle Locator Service (aka RLS)

INSURANCE CLAIM DELAYS DELIVER MASSIVE PROFITS TO INDUSTRY BY SHORTING CUSTOMERS

Court Rules in Favor of Goodwill on COVID-19 Business Interruption Matter

Legislation for Covid Closes Business Poicyholder

Will Recently Filed Federal Legislation for the Covid Closed Business Policyholder Have A Possibility Of Passage?

Coronavirus Claims: The Business of Business Interruption

Coronavirus Claims: The Business of Business Interruption.

Potential Insurance Coverage/Claim Issues from Covid-19 Outbreak

Georgia Insurance Dept. Touts 2019 Work for Consumers, Agents

Georgia Insurance Dept. Touts 2019 Work for Consumers, Agents