Loading
Insurance coverage disputes often turn on a deceptively simple question: What does the policy actually mean?
When policy language is unambiguous, courts generally enforce it according to its terms under the governing jurisdiction’s contract and insurance law. When language is reasonably susceptible to more than one interpretation, however, the analysis becomes more complicated. Parties may rely on drafting history, underwriting materials, communications, industry custom and practice, or expert testimony to support their positions.
That raises an important evidentiary question: Can an insurance expert create an ambiguity that is not otherwise present in the policy?
An expert’s assertion that policy language is ambiguous does not, by itself, establish legal ambiguity. The court must apply the governing jurisdiction’s contract-interpretation rules and determine whether the proposed interpretation is legally reasonable.
Courts may also exclude expert opinions that simply tell the decision-maker how to interpret an insurance contract or what legal result to reach. Properly limited testimony about industry terminology, custom and practice, underwriting, claims handling, or technical facts may still be useful, depending on governing law and the purpose for which the testimony is offered.
For attorneys handling insurance coverage litigation in 2026, understanding this distinction can affect expert selection, discovery, motions to exclude, and summary judgment strategy.
Insurance policies are contracts interpreted under the substantive law selected by the applicable choice-of-law rules. In many coverage cases, that means the insurance and contract law of a particular state.
Although the precise test varies by jurisdiction, courts commonly ask whether disputed policy language is reasonably susceptible to more than one reasonable interpretation when considered in context.
A disagreement between an insured and an insurer does not automatically make a provision ambiguous. Courts must evaluate competing interpretations under the governing jurisdiction’s contract-interpretation rules. An interpretation generally must be reasonable and consistent with the policy’s language, structure, and relevant legal principles.
Courts also distinguish policy interpretation from the resolution of disputed facts. Policy interpretation is ordinarily a question of law for the court. In some jurisdictions, however, unresolved conflicts in admissible extrinsic evidence may present factual questions for a jury or another factfinder.
These distinctions make jurisdiction-specific research essential before using expert testimony to support a proposed policy interpretation.
Insurance experts generally cannot create legal ambiguity simply by offering a competing interpretation of policy language, but properly limited expert testimony may help explain industry terminology, custom and practice, underwriting, claims handling, or technical facts when governing law permits it. This article examines the role of extrinsic evidence, recent coverage decisions, Rule 702 requirements, and the boundaries attorneys should define when using experts in insurance coverage disputes.
Insurance Coverage
Coverage Interpretation
Insurance Contracts
Underwriting
Insurance Claims
Claims Adjuster
Insurance coverage disputes often turn on a deceptively simple question: What does the policy actually mean?
When policy language is unambiguous, courts generally enforce it according to its terms under the governing jurisdiction’s contract and insurance law. When language is reasonably susceptible to more than one interpretation, however, the analysis becomes more complicated. Parties may rely on drafting history, underwriting materials, communications, industry custom and practice, or expert testimony to support their positions.
That raises an important evidentiary question: Can an insurance expert create an ambiguity that is not otherwise present in the policy?
An expert’s assertion that policy language is ambiguous does not, by itself, establish legal ambiguity. The court must apply the governing jurisdiction’s contract-interpretation rules and determine whether the proposed interpretation is legally reasonable.
Courts may also exclude expert opinions that simply tell the decision-maker how to interpret an insurance contract or what legal result to reach. Properly limited testimony about industry terminology, custom and practice, underwriting, claims handling, or technical facts may still be useful, depending on governing law and the purpose for which the testimony is offered.
For attorneys handling insurance coverage litigation in 2026, understanding this distinction can affect expert selection, discovery, motions to exclude, and summary judgment strategy.
Insurance policies are contracts interpreted under the substantive law selected by the applicable choice-of-law rules. In many coverage cases, that means the insurance and contract law of a particular state.
Although the precise test varies by jurisdiction, courts commonly ask whether disputed policy language is reasonably susceptible to more than one reasonable interpretation when considered in context.
A disagreement between an insured and an insurer does not automatically make a provision ambiguous. Courts must evaluate competing interpretations under the governing jurisdiction’s contract-interpretation rules. An interpretation generally must be reasonable and consistent with the policy’s language, structure, and relevant legal principles.
Courts also distinguish policy interpretation from the resolution of disputed facts. Policy interpretation is ordinarily a question of law for the court. In some jurisdictions, however, unresolved conflicts in admissible extrinsic evidence may present factual questions for a jury or another factfinder.
These distinctions make jurisdiction-specific research essential before using expert testimony to support a proposed policy interpretation.
Courts may exclude expert opinions that tell the court or jury how disputed policy language must be interpreted or what legal result must follow.
Potentially problematic conclusions include:
The concern is not simply that an opinion touches an ultimate issue. Federal Rule of Evidence 704 provides that an opinion is not automatically objectionable merely because it embraces an ultimate issue.
The more serious problem arises when an expert attempts to state governing law, replace the court’s interpretive role, direct the factfinder to a particular legal result, or offer an opinion that otherwise fails the applicable admissibility requirements. Federal appellate decisions have recognized that expert testimony does not assist the factfinder when it simply tells the jury what result to reach.
The 2025 proceedings in Liberty Mutual Insurance Company v. Day to Day Imports Inc. illustrate this distinction.
In its July 29, 2025 ruling, the U.S. District Court for the Southern District of New York excluded reports and testimony from insurance expert Barry Zalma on relevance grounds. The court did not find that Zalma was unqualified or that all of his methods were unreliable.
Instead, the court concluded that his interpretations of New York and California law formed the basis of several opinions, that portions of his factual summary did not require expert assistance, and that other opinions addressed matters reserved to the court or factfinders.
On September 3, 2025, the court granted reconsideration in part. It permitted three limited categories of custom-and-practice testimony concerning:
The remaining exclusions stayed in place.
These rulings illustrate how one federal court evaluated the particular opinions presented to it. They do not establish that the same testimony will be admissible in every insurance coverage dispute.
The answer depends heavily on governing state law and the purpose for which the testimony is offered.
There is an important difference between an expert advancing a preferred legal interpretation and an expert providing specialized information that applicable law permits the decision-maker to consider.
Depending on the issues, governing law, and the expert’s qualifications, potentially relevant subjects may include:
Some jurisdictions permit certain contextual evidence during the interpretation analysis. Others restrict the use of at least some forms of extrinsic evidence unless the policy language is first found ambiguous.
Counsel should therefore determine what governing law permits, and at what stage it permits that evidence, before retaining an expert primarily to support a proposed interpretation.
Extrinsic evidence is evidence outside the written policy offered for a legally permissible purpose. Depending on the jurisdiction and circumstances, it may include drafting history, communications, underwriting materials, course-of-dealing evidence, or proof of industry custom and usage.
There is no single nationwide rule governing when courts may consider such evidence.
New York provides a useful example. In Century Indemnity Co. v. Brooklyn Union Gas Co., an appellate court had already determined that the disputed policy language was ambiguous. The trial court later considered whether expert evidence concerning insurance-industry custom and practice could assist in construing that language.
The court rejected the argument that industry custom-and-practice evidence was categorically inadmissible. It explained that the proponent ultimately had to establish a sufficiently uniform and well-settled usage, along with actual or constructive knowledge attributable to the parties.
Although satisfying that substantive standard may be difficult, the court described the threshold showing required to place the issue before the jury as not demanding under the circumstances of that case.
Admitting the testimony did not establish that the asserted custom existed, that the parties possessed the necessary knowledge, or that the custom ultimately resolved the policy’s ambiguity.
Under the New York authorities discussed in Century Indemnity, admissible extrinsic evidence that addresses but does not resolve an ambiguity may leave factual questions for the factfinder. Other jurisdictions may follow different approaches.
California’s Montrose Chemical Corp. of California v. Superior Court litigation illustrates another important issue: counsel must confirm the current status of precedent before relying on it.
The dispute concerns qualified pollution exclusions in liability policies and Montrose’s attempt to use extrinsic evidence, including drafting history and insurance-industry materials, to support its proposed interpretation.
After prior California Supreme Court proceedings and a later transfer directing the Court of Appeal to reconsider the matter, the Court of Appeal issued a published opinion on September 30, 2025.
On December 30, 2025, the California Supreme Court granted review and limited the issues to questions concerning:
Because the California Supreme Court granted review, the Court of Appeal opinion does not have ordinary binding or precedential effect while review remains pending.
The Supreme Court’s order nevertheless permits the opinion to be cited for its persuasive value and for the limited purpose of establishing a conflict in authority that may allow a trial court to choose between conflicting lines of precedent under Auto Equity Sales, Inc. v. Superior Court. As of August 6, 2026, the California Supreme Court had granted review and had not issued a merits decision.
For coverage attorneys, Montrose reinforces an important practice point: check not only what a decision says, but also whether it remains precedential, whether review has been granted, and whether a case-specific order limits or expands how the opinion may be cited.
Preventing experts from dictating policy interpretation does not make expert testimony irrelevant. A qualified witness may potentially explain specialized terminology, industry practices, claims procedures, or other factual subjects when the testimony is relevant and admissible.
In a dispute involving underwriting conduct, for example, an appropriately qualified expert might explain procedures involving applications, endorsements, risk assessment, or the processing of underwriting information. Admissibility would still depend on the issues in the case and governing law.
Claims-handling expertise may involve investigation practices, staffing, documentation, or other specialized procedures. The Liberty Mutual reconsideration ruling provides one example of limited custom-and-practice testimony concerning claims investigations.
Coverage cases may also require technical experts whose work is separate from policy interpretation. In an environmental dispute, for example, an environmental professional might analyze the timing, source, or movement of contamination. The court can then determine how the policy applies to the legally relevant facts.
A witness’s qualifications should be evaluated opinion by opinion. Claims-handling experience, standing alone, may not establish expertise in underwriting, policy drafting, engineering, accounting, or another distinct discipline.
Consider an expert who writes:
“The pollution exclusion is ambiguous and therefore must be construed in favor of the insured.”
That statement does more than explain insurance practice. It tells the decision-maker both how to interpret the contract and what legal consequence should follow.
Compare that with:
“During the relevant period, this terminology was used within the insurance industry in the following ways.”
The second formulation is framed as specialized historical or industry context rather than an express direction concerning the policy’s legal meaning.
That does not make the second opinion automatically admissible. Rephrasing an opinion cannot cure a substantive problem if it still dictates policy interpretation, lacks a reliable basis, addresses matters within ordinary understanding, or concerns evidence that governing law does not permit the decision-maker to consider.
In federal court, expert testimony must satisfy Federal Rule of Evidence 702.
Following amendments effective December 1, 2023, Rule 702 expressly requires the proponent to demonstrate to the court that it is more likely than not that the rule’s admissibility requirements are satisfied.
The expert’s specialized knowledge must help the trier of fact understand the evidence or determine a fact in issue. The testimony must also be:
These requirements apply to experience-based experts as well as scientific and technical experts. When an opinion rests primarily on professional experience, the expert should explain how that experience supports the conclusion and provides a reliable basis for the specific opinion.
Federal Rule of Evidence 704 does not prohibit an opinion merely because it embraces an ultimate issue. It does not, however, authorize an expert to state governing law or direct the factfinder to a required legal conclusion.
In a federal coverage case, satisfying Rule 702 does not by itself establish that an opinion may be used to interpret the policy. Counsel must also determine whether governing substantive insurance law permits the court or factfinder to consider the subject of the testimony.
Before an expert report is prepared, counsel should consider:
An expert’s bare assertion that policy language is confusing does not create legal ambiguity.
At the same time, when governing law permits consideration of technical usage, custom, or contextual evidence at the relevant stage of interpretation, properly supported testimony may help the court evaluate a proposed specialized meaning. It may also assist a factfinder in resolving an ambiguity that has already been identified.
Defining that boundary before expert disclosure can reduce avoidable disputes over qualifications, relevance, methodology, and the permissible scope of testimony.
An insurance expert does not establish legal ambiguity merely by proposing a competing interpretation of policy language.
The proposed interpretation must be evaluated under the governing jurisdiction’s rules, including any rules concerning the permissible use of extrinsic evidence.
The more important distinction is between testimony that provides specialized knowledge and testimony that attempts to decide the legal coverage question. Industry terminology, custom and practice, underwriting, claims handling, and technical facts may be legitimate subjects when they are relevant, reliably supported, and permitted under governing law.
For attorneys, the key is not merely whether a witness has insurance experience. Counsel should determine whether each opinion is legally relevant, reliably supported, helpful under the applicable evidentiary standard, and consistent with the jurisdiction’s contract-interpretation rules.
Defining that role early can make expert testimony more useful while reducing the risk that important opinions will be excluded.
Can an insurance expert testify that a policy is ambiguous?
An expert generally should not instruct the court that policy language is legally ambiguous. Whether the expert may explain terminology, custom, drafting history, or other contextual evidence depends on governing law and the purpose for which the evidence is offered.
Can an expert quote or discuss policy language?
Potentially. Referring to policy language as factual context is different from dictating its legal meaning. An expert cannot avoid an impermissible policy interpretation merely by labeling the opinion as industry practice.
Can industry custom and practice help interpret ambiguous language?
In some jurisdictions and circumstances, custom-and-practice evidence may be considered when interpreting ambiguous contractual language. Other jurisdictions impose different limits on whether and when extrinsic evidence may be considered.
Does disagreement between experts make a policy ambiguous?
Not by itself. Competing expert opinions do not automatically establish legal ambiguity. The proposed interpretations must be evaluated under the governing jurisdiction’s contract-interpretation rules.
What should counsel determine before retaining an insurance expert?
Counsel should identify the precise specialized issue the expert will address, determine whether governing law permits the proposed testimony, review controlling precedent, and evaluate whether the opinion can satisfy the applicable admissibility standard.
Courts may exclude expert opinions that tell the court or jury how disputed policy language must be interpreted or what legal result must follow.
Potentially problematic conclusions include:
The concern is not simply that an opinion touches an ultimate issue. Federal Rule of Evidence 704 provides that an opinion is not automatically objectionable merely because it embraces an ultimate issue.
The more serious problem arises when an expert attempts to state governing law, replace the court’s interpretive role, direct the factfinder to a particular legal result, or offer an opinion that otherwise fails the applicable admissibility requirements. Federal appellate decisions have recognized that expert testimony does not assist the factfinder when it simply tells the jury what result to reach.
The 2025 proceedings in Liberty Mutual Insurance Company v. Day to Day Imports Inc. illustrate this distinction.
In its July 29, 2025 ruling, the U.S. District Court for the Southern District of New York excluded reports and testimony from insurance expert Barry Zalma on relevance grounds. The court did not find that Zalma was unqualified or that all of his methods were unreliable.
Instead, the court concluded that his interpretations of New York and California law formed the basis of several opinions, that portions of his factual summary did not require expert assistance, and that other opinions addressed matters reserved to the court or factfinders.
On September 3, 2025, the court granted reconsideration in part. It permitted three limited categories of custom-and-practice testimony concerning:
The remaining exclusions stayed in place.
These rulings illustrate how one federal court evaluated the particular opinions presented to it. They do not establish that the same testimony will be admissible in every insurance coverage dispute.
The answer depends heavily on governing state law and the purpose for which the testimony is offered.
There is an important difference between an expert advancing a preferred legal interpretation and an expert providing specialized information that applicable law permits the decision-maker to consider.
Depending on the issues, governing law, and the expert’s qualifications, potentially relevant subjects may include:
Some jurisdictions permit certain contextual evidence during the interpretation analysis. Others restrict the use of at least some forms of extrinsic evidence unless the policy language is first found ambiguous.
Counsel should therefore determine what governing law permits, and at what stage it permits that evidence, before retaining an expert primarily to support a proposed interpretation.
Extrinsic evidence is evidence outside the written policy offered for a legally permissible purpose. Depending on the jurisdiction and circumstances, it may include drafting history, communications, underwriting materials, course-of-dealing evidence, or proof of industry custom and usage.
There is no single nationwide rule governing when courts may consider such evidence.
New York provides a useful example. In Century Indemnity Co. v. Brooklyn Union Gas Co., an appellate court had already determined that the disputed policy language was ambiguous. The trial court later considered whether expert evidence concerning insurance-industry custom and practice could assist in construing that language.
The court rejected the argument that industry custom-and-practice evidence was categorically inadmissible. It explained that the proponent ultimately had to establish a sufficiently uniform and well-settled usage, along with actual or constructive knowledge attributable to the parties.
Although satisfying that substantive standard may be difficult, the court described the threshold showing required to place the issue before the jury as not demanding under the circumstances of that case.
Admitting the testimony did not establish that the asserted custom existed, that the parties possessed the necessary knowledge, or that the custom ultimately resolved the policy’s ambiguity.
Under the New York authorities discussed in Century Indemnity, admissible extrinsic evidence that addresses but does not resolve an ambiguity may leave factual questions for the factfinder. Other jurisdictions may follow different approaches.
California’s Montrose Chemical Corp. of California v. Superior Court litigation illustrates another important issue: counsel must confirm the current status of precedent before relying on it.
The dispute concerns qualified pollution exclusions in liability policies and Montrose’s attempt to use extrinsic evidence, including drafting history and insurance-industry materials, to support its proposed interpretation.
After prior California Supreme Court proceedings and a later transfer directing the Court of Appeal to reconsider the matter, the Court of Appeal issued a published opinion on September 30, 2025.
On December 30, 2025, the California Supreme Court granted review and limited the issues to questions concerning:
Because the California Supreme Court granted review, the Court of Appeal opinion does not have ordinary binding or precedential effect while review remains pending.
The Supreme Court’s order nevertheless permits the opinion to be cited for its persuasive value and for the limited purpose of establishing a conflict in authority that may allow a trial court to choose between conflicting lines of precedent under Auto Equity Sales, Inc. v. Superior Court. As of August 6, 2026, the California Supreme Court had granted review and had not issued a merits decision.
For coverage attorneys, Montrose reinforces an important practice point: check not only what a decision says, but also whether it remains precedential, whether review has been granted, and whether a case-specific order limits or expands how the opinion may be cited.
Preventing experts from dictating policy interpretation does not make expert testimony irrelevant. A qualified witness may potentially explain specialized terminology, industry practices, claims procedures, or other factual subjects when the testimony is relevant and admissible.
In a dispute involving underwriting conduct, for example, an appropriately qualified expert might explain procedures involving applications, endorsements, risk assessment, or the processing of underwriting information. Admissibility would still depend on the issues in the case and governing law.
Claims-handling expertise may involve investigation practices, staffing, documentation, or other specialized procedures. The Liberty Mutual reconsideration ruling provides one example of limited custom-and-practice testimony concerning claims investigations.
Coverage cases may also require technical experts whose work is separate from policy interpretation. In an environmental dispute, for example, an environmental professional might analyze the timing, source, or movement of contamination. The court can then determine how the policy applies to the legally relevant facts.
A witness’s qualifications should be evaluated opinion by opinion. Claims-handling experience, standing alone, may not establish expertise in underwriting, policy drafting, engineering, accounting, or another distinct discipline.
Consider an expert who writes:
“The pollution exclusion is ambiguous and therefore must be construed in favor of the insured.”
That statement does more than explain insurance practice. It tells the decision-maker both how to interpret the contract and what legal consequence should follow.
Compare that with:
“During the relevant period, this terminology was used within the insurance industry in the following ways.”
The second formulation is framed as specialized historical or industry context rather than an express direction concerning the policy’s legal meaning.
That does not make the second opinion automatically admissible. Rephrasing an opinion cannot cure a substantive problem if it still dictates policy interpretation, lacks a reliable basis, addresses matters within ordinary understanding, or concerns evidence that governing law does not permit the decision-maker to consider.
In federal court, expert testimony must satisfy Federal Rule of Evidence 702.
Following amendments effective December 1, 2023, Rule 702 expressly requires the proponent to demonstrate to the court that it is more likely than not that the rule’s admissibility requirements are satisfied.
The expert’s specialized knowledge must help the trier of fact understand the evidence or determine a fact in issue. The testimony must also be:
These requirements apply to experience-based experts as well as scientific and technical experts. When an opinion rests primarily on professional experience, the expert should explain how that experience supports the conclusion and provides a reliable basis for the specific opinion.
Federal Rule of Evidence 704 does not prohibit an opinion merely because it embraces an ultimate issue. It does not, however, authorize an expert to state governing law or direct the factfinder to a required legal conclusion.
In a federal coverage case, satisfying Rule 702 does not by itself establish that an opinion may be used to interpret the policy. Counsel must also determine whether governing substantive insurance law permits the court or factfinder to consider the subject of the testimony.
Before an expert report is prepared, counsel should consider:
An expert’s bare assertion that policy language is confusing does not create legal ambiguity.
At the same time, when governing law permits consideration of technical usage, custom, or contextual evidence at the relevant stage of interpretation, properly supported testimony may help the court evaluate a proposed specialized meaning. It may also assist a factfinder in resolving an ambiguity that has already been identified.
Defining that boundary before expert disclosure can reduce avoidable disputes over qualifications, relevance, methodology, and the permissible scope of testimony.
An insurance expert does not establish legal ambiguity merely by proposing a competing interpretation of policy language.
The proposed interpretation must be evaluated under the governing jurisdiction’s rules, including any rules concerning the permissible use of extrinsic evidence.
The more important distinction is between testimony that provides specialized knowledge and testimony that attempts to decide the legal coverage question. Industry terminology, custom and practice, underwriting, claims handling, and technical facts may be legitimate subjects when they are relevant, reliably supported, and permitted under governing law.
For attorneys, the key is not merely whether a witness has insurance experience. Counsel should determine whether each opinion is legally relevant, reliably supported, helpful under the applicable evidentiary standard, and consistent with the jurisdiction’s contract-interpretation rules.
Defining that role early can make expert testimony more useful while reducing the risk that important opinions will be excluded.
Can an insurance expert testify that a policy is ambiguous?
An expert generally should not instruct the court that policy language is legally ambiguous. Whether the expert may explain terminology, custom, drafting history, or other contextual evidence depends on governing law and the purpose for which the evidence is offered.
Can an expert quote or discuss policy language?
Potentially. Referring to policy language as factual context is different from dictating its legal meaning. An expert cannot avoid an impermissible policy interpretation merely by labeling the opinion as industry practice.
Can industry custom and practice help interpret ambiguous language?
In some jurisdictions and circumstances, custom-and-practice evidence may be considered when interpreting ambiguous contractual language. Other jurisdictions impose different limits on whether and when extrinsic evidence may be considered.
Does disagreement between experts make a policy ambiguous?
Not by itself. Competing expert opinions do not automatically establish legal ambiguity. The proposed interpretations must be evaluated under the governing jurisdiction’s contract-interpretation rules.
What should counsel determine before retaining an insurance expert?
Counsel should identify the precise specialized issue the expert will address, determine whether governing law permits the proposed testimony, review controlling precedent, and evaluate whether the opinion can satisfy the applicable admissibility standard.
Insurance Coverage
Coverage Interpretation
Insurance Contracts
Underwriting
Insurance Claims
Claims Adjuster
Expert Witness Insights by Area of Expertise
Expert Witness Insights by Area of Expertise
