Do Actions Speak Louder than Words?

'Insurance coverage litigation frequently requires coverage lawyers to take on the role of archeologist and historian. Particularly in cases involving long-tail claims, multiple triggered policy periods and the resurrection and scrutiny of decades-old policies, we look for evidence tending to show that the opposing party has interpreted certain policy provisions differently from the interpretation it now advances for the very same provisions. Extrinsic evidence of past policy interpretation may take many forms, and one form is evidence of the parties' own course of performance with regard to the insurance policies at issue.

In essence, where an insurance policy is ambiguous, a court may consider the parties' course of performance of their contract as extrinsic evidence of the construction they gave to it. To be probative, however, the course of performance must be conclusive and mutual. Then, such course-of-performance evidence is generally entitled to considerable weight in ascertaining the parties' intent, unless a party provides an alternative explanation for its conduct that negates the probative value of such evidence.