In David Feldman’s popular book entitled Why Do Clocks Run Clockwise and Other Imponderables, the author answers such questions as “why do American cars now have side-view mirrors on the passenger side with the message, ‘objects in the mirror are closer than they appear’?” Although the pursuit of trivia may be fun to some, in a legal setting it can be serious business. Liability can be established or exonerated based upon a court’s understanding of the relationship of parties and particularly, in an insurance context, the evolution of the insurance form.
The general rules of interpretation for an insurance contract are solidly rooted in compelling facts underlying the particular case establishing the rule. From that origin the courts often adapt the same rules to other forms of insurance under the premise that the evolution of one line of insurance policy is similar to others. Sometimes, the reason for the rule is lost and the rule is applied thereafter without thought. The purpose of this article is to trace back to the genesis of the first standard form title insurance policy and examine the process for its evolution to today’s modern form. Further, this article will question the policy interpretation rules often recited by lawyers advancing claims on lender’s title insurance policies.