Professor Jeffrey Stempel’s scholarship has all the time had a knack for shaking up how we take into consideration insurance coverage legislation. His article, The Insurance coverage Coverage as Factor, 1 initially revealed within the Tort Trial & Insurance coverage Apply Legislation Journal, continues that legacy by difficult a authorized behavior so entrenched we not often cease to query it. He questions the concept that an insurance coverage coverage is rather like any business contract. Stempel convincingly argues that this view just isn’t solely incomplete but additionally dangerously deceptive relating to understanding how insurance coverage really operates in the actual world.
He makes the case that an insurance coverage coverage is way extra like a product. It’s a much more standardized, mass-produced “factor” that’s purchased and bought, and never a bespoke settlement negotiated by equal events. Insurers draft the language, regulators approve it, and shoppers buy it largely on religion. The transaction feels much less like a handshake deal and extra like shopping for an equipment off the shelf. You count on it to work as marketed, to not uncover hidden disclaimers whenever you attempt to use it. Stempel’s level is that courts and attorneys ought to interpret insurance policies with that actuality in thoughts.
By viewing insurance coverage insurance policies as merchandise, not simply contracts, Stempel opens the door for a extra trustworthy, sensible, and truthful method to protection interpretation. It acknowledges that almost all policyholders lack the facility or experience to haggle over the positive print. They’re buying peace of thoughts. Insurance coverage is functioning as a safety machine, not a maze of exclusions. This lens makes the legislation much less about parsing clauses and extra about fulfilling the aim for which insurance coverage exists: to switch and unfold danger in order that people and companies can transfer ahead after catastrophe strikes.
What’s refreshing about Stempel’s work is that he doesn’t cease at concept. He makes use of examples that each protection lawyer acknowledges. He notes the “seen marks of housebreaking” circumstances, air pollution exclusions stretched to absurdity, and the countless debates over coverage interval limits. By way of these examples, he demonstrates how a “policy-as-product” perspective results in outcomes that make sense each commercially and morally. It’s the sort of pragmatic perception that reminds us why his writing stays important studying for anybody severe about easy methods to interpret insurance coverage contracts, from somebody who has been learning this his complete life.
I first bumped into Stempel when he was a training lawyer arguing a Hurricane Andrew case. I used to be fascinated by his strategy of breaking down clauses in his briefs. He later grew to become a legislation professor at Florida State College after which moved to the College of Las Vegas. I wrote about him earlier this 12 months in Deeper Evaluation of How you can Interpret Insurance coverage Coverage Language—The place Insurance coverage Protection Nerds Go for the Weekend. I additionally famous Professor Stempel in different posts, together with Main Insurance coverage Tutorial Proves State Farm Accepts “Cheap Expectations” of Insurance coverage Protection.
In my subsequent submit, I’ll proceed exploring Stempel’s concepts and deal with one other main theme in his article: what it means for judicial interpretation and equity when courts take the product nature of insurance coverage severely. This one’s price digging into.
For our readers, I attempt to publish one thing day-after-day. On Saturday, I caught an terrible chilly whereas racing on the Chip’s Ahoy! Nonetheless haven’t shaken it, however wished to get what has been on my thoughts for a number of days.
Cheers!
Thought for the Day
“We form our instruments and thereafter our instruments form us.”
—Marshall McLuhan
1 Jeffrey W. Stempel, The Insurance coverage Coverage as Factor, 44 Tort Trial & Ins. Prac. L.J. 813 (Spring/Summer time, 2009).
