Johnny Parker

Abstract

This article explores the inconsistency with which courts interpret severability of interest clauses in insurance policy exclusions. It examines severability of interest clauses and discusses the rules courts use to interpret them. Specifically, the article outlines three methodologies of contract interpretation that courts employ when faced with severability-of-interest clause controversies and evaluates each method’s strengths and weaknesses. The article concludes that behind these different interpretive methods lie two schools of thought among the courts: those that follow a “traditional or formalist” approach and those that follow a “functional or reasonable expectations” approach.

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