16.7 Rules of Policy Interpretation

• Library: Insurance Law in Virginia (Virginia CLE) (2020 Ed.)

16.7 RULES OF POLICY INTERPRETATION

16.701 In General. A CGL policy is a contract. Accordingly, the Virginia Supreme Court has ruled on several occasions that CGL policies are subject to traditional rules of contract interpretation.

16.702 Clear Language Is Enforced as Written. Courts will enforce clear language as it is written. Where an agreement is complete on its face and is plain and unambiguous in its terms, the court is not at liberty to search for its meaning beyond the instrument itself. ¹³⁷ Therefore, unless a party can show that the language of the policy is ambiguous, courts will enforce it as written. This leads to the question of what constitutes an ambiguity.

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16.703 Intent of the Parties. A second standard is that insurance policies are to be interpreted and construed in a manner consistent with the intent of the parties. The Virginia Supreme Court noted that "it is our function and duty to ascertain and effectuate [the parties'] lawful intention. In so doing, we should place ourselves in the position of the parties when the contract was made, consider the purposes, the subject matter, and the circumstances under which their minds met." ¹³⁸

16.704 Ambiguities, Parol Evidence, and Construction Against the Drafter. According to the Virginia Supreme Court "[a]mbiguity means words, language, or expressions which are capable of more senses than one, difficult to comprehend or distinguish, of doubtful import or uncertain nature, of doubtful purport, open to various interpretations, or wanting clearness or definiteness; in short, the effect of words that have either no definite sense or a double one." ¹³⁹ For a party to advance the inquiry beyond the language of the policy, he or she must show that the words at issue are capable of multiple...