Since the 2017 Annual Meeting, many changes have been made to the Liability Insurance project draft.  Sections 3 and 4, The Plain-Meaning Rule and Ambiguous Terms, have both been significantly revised to reflect the decision to adopt a plain meaning rule.

Black letter for each Section is included below.  The full draft contains Comments (with Illustrations) and Reporters’ Notes.

§ 3. The Plain-Meaning Rule

(1) The plain meaning of an insurance policy term is the single meaning to which the language of the term is reasonably susceptible when applied to facts of the claim at issue in the context of the entire insurance policy.

(2) If an insurance policy term has a plain meaning when applied to the facts of the claim at issue, the term is interpreted according to that meaning.

(3) An insurance policy term is ambiguous if there is more than one meaning to which the language of the term is reasonably susceptible when applied to the facts of the claim at issue in the context of the entire insurance policy. An ambiguous term is interpreted as specified in § 4.

§ 4. Ambiguous Terms

When an insurance policy term is ambiguous as defined in § 3(3), the term is interpreted against the party that supplied the term, unless that party persuades the court that a reasonable person in the policyholder’s position would not give the term that interpretation.