Breach of Contract Claims: How Courts Interpret Life Insurance Policies

Q:        What law governs a breach of contract claim?

A:         In the majority of group life insurance cases state law governs the interpretation of life insurance policies when federal jurisdiction is based on diversity of citizenship  (the insured lived in State A and the insurance company is headquartered in State B).[1]

Under laws of many states, contract interpretation is a question of law and to prevail on a breach of contract claim, a beneficiary must show that there was a promise (e.g., a promise to pay life insurance benefits upon the insured’s death); that the insurance company breached that promise (the insurance company denied a claim); and that the beneficiary suffered damages as a result of the insurer’s breach (the beneficiary did not receive the payout).

Q:        Who can make a breach of contract claim?

A:         A beneficiary whose claim was denied due to the wrongful interpretation of the policy language may have a valid claim for breach of contract. Unfortunately, only few policies have very specific promise to pay.

For example, “You are covered under the death benefit if you die in an accident in any motor vehicle” is specific and cannot have several interpretations.

However, the majority of policies are worded in a way that offers two or even several interpretations. For example, “We will pay a death benefit if your die in an accident …  independent of other causes.” If there is no definition of the word ‘accident’ and ‘other causes’ are not listed, virtually any death may be excluded.

Q:        How can ambiguous language in a life insurance policy hurt the beneficiary?

A:         The insurance company may use ambiguous language in its policy to deny your claim.

If John, the insured, died in a car accident and the accidental death policy is ambiguous, the insurer may deny the claim by stating, for example, that John’s death was not independent of other causes.

If John’s toxicology report shows prescription medications, the insurer may claim that John was sick and his sickness caused him to lose control of the car.

If there was some alcohol found in John’s system, the insurance company may deny the claim by stating that John’s death was not independent of other causes, because he was intoxicated and unable to control his car.

If John survived the accident, but died in a hospital due to medical malpractice, the insurance company may deny the claim and say that the medical mistake,  not the accident, caused John’s death. There are many other possible scenarios of how an insurer may deny a claim based on ambiguous language.

Q.         Do I need a breach of contract attorney to file a claim for me?

A:         At our law firm, we always recommend clients to get legal advice before filing a claim. Insurance policies often use complex language that may be difficult to understand. In addition, a skilled contract attorney will notice ambiguous language and will advise you on how to proceed.

Call us now at (888) 510-2212. Competitive contingent fees.


[1] O’Daniel v. Hartford Life Ins. Co., 2013 U.S. Dist. LEXIS 188540.

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About the author

Attorney Tatiana Kadetskaya has over 10 years of experience in life insurance law representing beneficiaries and policy owners. She is best known for successfully collecting denied and delayed claims and settling complex beneficiary disputes and interpleader lawsuits.

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