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Ambiguity in Contract Language
Apr. 28th, 2023 02:54 pmI've been thinking about this language in the insurance contract. In fact, I asked my brother, who was a lawyer but is no longer practicing law, if he has time to talk to me about this stuff because I'm really curious.
"We will not pay for increased costs that result when you cannot repair or replace your property because material or parts are unavailable, obsolete or outmoded. In the event that new property of like kind and quality is not obtainable because material or parts are unavailable or obsolete, new property which is as similar as possible to that damaged or destroyed and which is capable of performing the same function shall be deemed to be new property of like kind and quality."
There is ambiguity about this in several forms; some in the language itself, and some in how to interpret that language in the context of some decisions that have been made in my claim.
"...which is capable of performing the same function..." How finely can you slice up functionality? The receivers, as an example. They both play audio on two channels at around 70 watts per channel. Good enough? But the vintage one had tone knobs that could adjust tone independently on the right and left channels and the new one does not. Is that a sufficiently important 'function' to complain about?
What makes an extra cost a function of obsolescence? Due to lack of use and need, modern audio gear doesn't tend to have extra mains outlets on the back side. This is a lack of functionality on the proposed new receiver, but is that functionality actually something that was in place because of reasons that are now obsolete? Would that make the extra cost of a replacement unit that has them a cost related to obsolescence, which would mean it's not covered? Even though I use them with my other vintage hardware like my turntable?
The language doesn't have any provisions for what to do if a new item of like functionality is simply not available. I might have thought that that means the closest possible match, no matter how different in functionality, will be provided. No one is making 300-disc CD changers anymore. The closest new property of like kind and quality and capable of performing something resembling the same function would probably be some kind of stand-alone single CD player. But their proposed replacement is a used 300 disc changer, so obviously, if the difference is large enough, they sometimes propose a replacement that is *not* new. How much difference does there need to be for that to be the solution?
Along those lines, they propose replacing my slide rule with a slide rule even though a new item of like quality (if not kind) that is capable of performing the same function is easy and cheap to find; a pocket calculator that does log and trig functions. By proposing a slide rule instead, they are accepting increased costs that come from the property being unavailable, obsolete, or outmoded, which the contract says they will not do.
Another bit of language in the contract says "We agree to pay for insured loss or damage to Personal Property on the basis of Replacement Cost provided that: a) the property at the time of the loss was useable for its original purpose..."
How finely can we slice up original purpose? My receiver was being used for its original purpose of playing music. However, one particular feature, the quadradial out jack, was not being used for its original purpose, because that purpose was speculative in the first place and never came to fruition. But I can use that jack for a different purpose; monitoring RDS information by sending unfiltered FM signal to a computer, for instance. I'm planning to argue that functionality afforded by that kind of output is missing from the proposed replacement and thus it is not capable of performing the same function. But is that a valid argument if that specific *feature* of the item is no longer used for its original purpose?
I feel like these are probably the kind of questions that end up getting adjudicated in court, and the winner would end up being the entity with the best lawyer.
I also wonder whether these contracts could be written more clearly to address these kinds of edge cases, and, if so, whether there is some financial incentive on the part of insurance companies not to create such contracts. Maybe they save more money via legal adjudication of disagreements than they pay in fees to settle such disagreements. I mean, I certainly don't want to spend a bunch of money on a lawyer for something like this where the difference in value is only between $1000 to $1500, and I might have a decision made against me anyway.
But these are the things I wonder about.
"We will not pay for increased costs that result when you cannot repair or replace your property because material or parts are unavailable, obsolete or outmoded. In the event that new property of like kind and quality is not obtainable because material or parts are unavailable or obsolete, new property which is as similar as possible to that damaged or destroyed and which is capable of performing the same function shall be deemed to be new property of like kind and quality."
There is ambiguity about this in several forms; some in the language itself, and some in how to interpret that language in the context of some decisions that have been made in my claim.
"...which is capable of performing the same function..." How finely can you slice up functionality? The receivers, as an example. They both play audio on two channels at around 70 watts per channel. Good enough? But the vintage one had tone knobs that could adjust tone independently on the right and left channels and the new one does not. Is that a sufficiently important 'function' to complain about?
What makes an extra cost a function of obsolescence? Due to lack of use and need, modern audio gear doesn't tend to have extra mains outlets on the back side. This is a lack of functionality on the proposed new receiver, but is that functionality actually something that was in place because of reasons that are now obsolete? Would that make the extra cost of a replacement unit that has them a cost related to obsolescence, which would mean it's not covered? Even though I use them with my other vintage hardware like my turntable?
The language doesn't have any provisions for what to do if a new item of like functionality is simply not available. I might have thought that that means the closest possible match, no matter how different in functionality, will be provided. No one is making 300-disc CD changers anymore. The closest new property of like kind and quality and capable of performing something resembling the same function would probably be some kind of stand-alone single CD player. But their proposed replacement is a used 300 disc changer, so obviously, if the difference is large enough, they sometimes propose a replacement that is *not* new. How much difference does there need to be for that to be the solution?
Along those lines, they propose replacing my slide rule with a slide rule even though a new item of like quality (if not kind) that is capable of performing the same function is easy and cheap to find; a pocket calculator that does log and trig functions. By proposing a slide rule instead, they are accepting increased costs that come from the property being unavailable, obsolete, or outmoded, which the contract says they will not do.
Another bit of language in the contract says "We agree to pay for insured loss or damage to Personal Property on the basis of Replacement Cost provided that: a) the property at the time of the loss was useable for its original purpose..."
How finely can we slice up original purpose? My receiver was being used for its original purpose of playing music. However, one particular feature, the quadradial out jack, was not being used for its original purpose, because that purpose was speculative in the first place and never came to fruition. But I can use that jack for a different purpose; monitoring RDS information by sending unfiltered FM signal to a computer, for instance. I'm planning to argue that functionality afforded by that kind of output is missing from the proposed replacement and thus it is not capable of performing the same function. But is that a valid argument if that specific *feature* of the item is no longer used for its original purpose?
I feel like these are probably the kind of questions that end up getting adjudicated in court, and the winner would end up being the entity with the best lawyer.
I also wonder whether these contracts could be written more clearly to address these kinds of edge cases, and, if so, whether there is some financial incentive on the part of insurance companies not to create such contracts. Maybe they save more money via legal adjudication of disagreements than they pay in fees to settle such disagreements. I mean, I certainly don't want to spend a bunch of money on a lawyer for something like this where the difference in value is only between $1000 to $1500, and I might have a decision made against me anyway.
But these are the things I wonder about.
