Opinion ID: 1985249
Heading Depth: 1
Heading Rank: 4

Heading: Principles Utilized in Interpreting Insurance Contracts

Text: Initially, in reviewing an insurance policy dispute we must look to the language of the insurance policy and interpret the terms therein in accordance with Michigan's well-established principles of contract construction. Arco Industries Corp. v. American Motorists Ins. Co., 448 Mich. 395, 402, 531 N.W.2d 168 (1995). First, an insurance contract must be enforced in accordance with its terms. Upjohn Co. v. New Hampshire Ins. Co., 438 Mich. 197, 207, 476 N.W.2d 392 (1991). A court must not hold an insurance company liable for a risk that it did not assume. Auto-Owners Ins. Co. v. Churchman, 440 Mich. 560, 567, 489 N.W.2d 431 (1992). Second, a court should not create ambiguity in an insurance policy where the terms of the contract are clear and precise. Id. Thus, the terms of a contract must be enforced as written where there is no ambiguity. Stine v. Continental Casualty Co., 419 Mich. 89, 114, 349 N.W.2d 127 (1984). While we construe the contract in favor of the insured if an ambiguity is found, Auto Club Ins. Ass'n v. DeLaGarza, 433 Mich. 208, 214, 444 N.W.2d 803 (1989), this does not mean that the plain meaning of a word or phrase should be perverted, or that a word or phrase, the meaning of which is specific and well recognized, should be given some alien construction merely for the purpose of benefitting an insured. Upjohn Co, supra at 208, n. 8, 476 N.W.2d 392. The fact that a policy does not define a relevant term does not render the policy ambiguous. Auto Club Group Ins. Co. v. Marzonie, 447 Mich. 624, 631, 527 N.W.2d 760 (1994). Rather, reviewing courts must interpret the terms of the contract in accordance with their commonly used meanings. Group Ins. Co. of Michigan v. Czopek, 440 Mich. 590, 596, 489 N.W.2d 444 (1992). Indeed, we do not ascribe ambiguity to words simply because dictionary publishers are obliged to define words differently to avoid possible plagiarism. Upjohn Co, supra at 209, n. 8, 476 N.W.2d 392.