In the last thirty years, the doctrine of reasonable expectation has become one of the most contentious doctrines to be established in insurance law.
Under this law, coverage is often granted to a person that is being insured even in cases where the terms used in the policy do not make coverage available.
This doctrine often goes further than the traditional rule of interpretation which grants undue coverage to a person that is insured by analyzing arcane words used in the policy language in favour of the insured against the insurance company.
A lot of systematic approaches have come to light but because some of these approaches have decided to ignore the policy of the insurer even when stated in clear terms rather, than favour the expectations of the insured, a lot of controversies have then been created.
Also, in the regions where it has been officially accepted, a little bit of turmoil still exists when it comes to understanding and putting to use the doctrine.
As a result of this, some salient cases still linger further. Over time, the doctrine of reasonable approach has been outlined into four and these four approaches span from the conventional rules of interpretation to the hazardous risky manipulation of the language of the insurance company.
In the same vein, the language of the four approaches is connected in a way that sometimes, one could be mistaken for the other so, in other to be on the safe side, it has been advised that while a court of law considers judgement, it should endeavour to look at it from the eyes of the four approaches in order to be able to justify their verdict.
Accordingly, how a particular region brings up and analyzes a policy in accordance with what the expectation of the insured may be could vary from how the other region sees it.
1. Ambiguity and Traditional Insurance Policy Rules of Construction
In judgement, several courts only apply the doctrine of reasonable expectations in the case where the policy language is considered vague, difficult to understand or has more than one terminology and each of its meanings has a different interpretation which may affect the language or meaning of what was said or written.
In this case, it is very normal for the court of law to pass judgement in favour of the insured. Should there be an ambiguous statement in the policy, insurers are expected however to explain in detail the meaning of every word to the insured.
So, the rules of construction are set out to instruct insurers to clearly state what their company wants while omitting what they do not want in a clear and precise format as policies with loopholes cost them a lot in the future.
2. Avoiding unfair Results
The doctrine of reasonable expectation is often employed by some courts in order to prevent outcomes that are unfair or “unconscionable”.
In this case, the courts are more than ready to ignore the clear policy terms just to make sure that there is fairness in the terms of the policy.
Those who support this policy are of the opinion that insurance policies should become models when it comes to obeying contract terms and they maintain that the insurance companies possess incredible custody over the coverage terms through understanding the important and well-laid-out practice of the determination of risks.
As an addendum, the supporters of this policy are of the opinion also that list persons who buy insurance policies do not really read the content and even when they do, they do not understand what they read, hence, the courts stand firm on the policy if the fairness of the policy of insurance in order to protect against procedural unfairness, structural unfairness and situational unfairness.
3. Promoting the Purpose of Insurance
In some instances, (although very rare) the courts often make use of the doctrine of reasonable expectations to further the reason for the insurance.
In this case, what the courts are primarily concerned about is making a policy in terms of insurance to carry out the purpose which it was originally intended for.
The courts often recognize the fact that when there is strict enforcement of the written policy language, it would foster the evisceration of the fundamental purpose of the transaction of insurance.
As a result, in order the justification of their action in regard to the refusal of the enforcement of written policy language, some courts call forth the doctrine of reasonable expectations.
4. Protection of Third-Party Interests
In some cases, although extremely rare, the courts bring in this doctrine of reasonable expectation to fit the purpose of safeguarding third-party interests.
This is often largely because the coverage of insurance sometimes impacts third parties which may include an insured’s spouse, family members, employees, etc.