What does Contra Proferentem Rule mean? Read on to discover the definition & meaning of the term Contra Proferentem Rule - to help you better understand the language used in insurance policies.
Contra Proferentem Rule
A universally applied rule that ambiguities in an insurance policy will be strictly interpreted against the insurer. Application of this rule is a three-step process: (1) The court examines the policy language to determine whether it is ambiguous. (2) If the language is unclear, the court will admit extrinsic evidence to clarify the policy and determine the parties' intent at the time they entered into the contract; if the extrinsic evidence dispels the ambiguity, the contract is applied in accordance with its true meaning as ascertained by the extrinsic evidence. (3) If the extrinsic evidence does not clarify the ambiguities, thecontra proferentem rule is applied, and the ambiguous language is construed in favor of the insured and against the insurer.
We hope the you have a better understanding of the meaning of Contra Proferentem Rule.