Legal Memorandum: Interpretation of Insurance Contracts in VT

Issue: Do the courts in Vermont generally construe insurance policies in favor of the insured?

Construction of the language of insurance contracts is a question of law.  Concord Gen. Mut. Ins. Co. v. Madore, 178 Vt. 281, 882 A.2d 1152 (2005).  Insurance contracts are construed by the court in accordance with their terms and the parties’ intent as disclosed by those terms.  RLI Ins. Co. v. Agency of Transp., 171 Vt. 553, 762 A.2d 475 (2000).  However, because a policy is prepared by the insurer with little effective input from the insured, courts construe insurance policies in favor of the insured, in accordance with the insured’s “reasonable expectations for coverage” based on the policy language.  Hardwick Recycling & Salvage, Inc. v. Acadia Ins. Co., 177 Vt. 421, 869 A.2d 82 (2004).

An “endorsement” is a writing added to or attached to a policy which either expands or restricts the insurance in the policy.  Fireman’s Fund Ins. Co. v. CNA Ins. Co., 177 Vt. 215, 862 A.2d 251 (2004).  An endorsement becomes part of the policy when issued and is to be read together with the rest of the policy as one document.  Id.  Generally, however, where there is a conflict between the language of the original policy and the provisions of the endorsement, the endorsement provisions prevail.  Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025 (9th Cir. 2008); Essex Ins. Co. v. Vincent, 52 F.3d 894 (10th Cir. 1995).  This is because “endorsements by […]