Legal Memorandum: Ambiguities in an Insurance Policy

Issue: Under Missouri law, are ambiguities in an insurance policy favored toward the insurer or the insurer?

         The purpose of insurance policies is to provide coverage for unknown future risks, and to achieve that object they are liberally construed in favor of the insured.  “Missouri law favors a liberal construction of auto liability insurance policies and as stated in Giokaris v. Kincaid, 331 S.W.2d 633, 639 (Mo. 1960), quoting Varble v. Stanley, 306 S.W.2d 662, 665 (Mo. [Ct.] App. 1957), `an insurance policy, being a contract designated to furnish protection, will, if reasonably possible, be construed so as to accomplish that object and not to defeat it.'”  Weathers v. Royal Indem. Co., 577 S.W.2d 623, 626 (Mo. 1979) (en banc).

Any ambiguities are to be construed in favor of the insured and against the insurer:

The language of an insurance policy is ambiguous when it is reasonably and fairly open to different constructions.  Ambiguity arises when there is duplicity, indistinctness, or uncertainty of meaning.  In interpreting whether the language used in the policy is ambiguous, the words will be tested in light of the meaning which would normally be understood by the layperson who bought and paid for the policy. . . .

Where an insurance policy is open to different constructions, that most favorable to the insured must be adopted.

Krombach v. Mayflower Ins. Co., 785 S.W.2d 728, 731 (Mo. Ct. App. 1990) (citing Nixon v. Life Investors Ins. Co. of Am., 675 S.W.2d 676, 679 (Mo. Ct. App. 1984)).  […]