InSurOp-Ed: What ChatGPT Says About Exclusions in Insurance Policies…

…and Why I’m Not Worried the App Will Put Me Out of a Job Any Time Soon

So many people are talking about ChatGPT — the artificial intelligence content creator — that awareness of it has trickled down even to us attorneys, well-known to be late adopters of all technology.  I thought I’d give it a try.  I signed up for ChatGPT (which took several attempts, none of which were my fault, and included one message that I would have to wait because traffic was heavy — not a great sign for the cuttingest-edge tech), and I input this question:

In Massachusetts what should you do if your insurance carrier says that an exclusion applies to a claim against you?

ChatGPT generated this response:

If your insurance carrier says that an exclusion applies to a claim against you in Massachusetts, you have several options:

1.     Review the policy: Make sure you understand the specific exclusion and its terms. You may want to review the policy documents and any relevant laws or regulations.

2.     Negotiate with the other party: If you believe that the exclusion should not apply, you may try to negotiate with the other party to reach a settlement.

3.     Hire an attorney: If you are unable to resolve the issue with the other party, you may want to consider hiring an attorney who specializes in insurance law. An attorney can help you understand your rights and options and represent you in negotiations or in court.

4.     File a complaint with the Massachusetts Division of Insurance: If you are dissatisfied with the insurance company’s decision, you may file a complaint with the Massachusetts Division of Insurance. This agency can investigate the matter and take appropriate action, such as ordering the insurance company to pay a claim or imposing fines.

If the exclusion is valid and the claim is not covered under your policy, you may be personally responsible for paying any damages or legal costs associated with the claim. In this situation, it’s important to consider your options and to consult with an attorney if necessary.

While this response has some okay isolated statements, overall, I would rate it: malpractice.  I’ll take it point by point:

1.     Review the policy: Make sure you understand the specific exclusion and its terms. You may want to review the policy documents and any relevant laws or regulations.

This may work for the simplest exclusions, but even then I wouldn’t bet on it.  If you have a homeowner’s policy that excludes – let me make up a good one here – “damages arising out of the ownership of dinosaurs,” and you have a pet dinosaur that eats your plumbing, resulting in water damage, it might seem obvious that the exclusion excludes coverage. Right?

Well, not necessarily.  What part of the policy lists the exclusion?  If the exclusion is within your property coverage – which covers damage to your own house – it might apply.  But if it’s in your liability coverage – which covers injuries or property damage you cause to someone else – it might not apply. 

Even if the exclusion is in the relevant portion of the policy, are their any exceptions to the exclusion?  Or any limitations to it?  Or has it been removed altogether?  Your policy may have thirty different forms and endorsements, and language affecting the exclusion may be in a different endorsement than the exclusion itself.

And what about the courts?  Have they interpreted the exclusion?  What have they concluded?

If you have been told that an exclusion applies, don’t try to figure it out yourself.  Consult an attorney who specializes in insurance coverage issues. 

2.   Negotiate with the other party: If you believe that the exclusion should not apply, you may try to negotiate with the other party to reach a settlement.

WRONG.  This would only be correct if the “other party” is the insurance company – but typically the other party is the party who is suing you, for which you are seeking insurance coverage.  If you believe the exclusion does not apply, you need to deal with the insurance company on coverage, not settle with the other party.  Again, hire an attorney.

3.  Hire an attorney: If you are unable to resolve the issue with the other party, you may want to consider hiring an attorney who specializes in insurance law. An attorney can help you understand your rights and options and represent you in negotiations or in court.

This is good advice, except for the order.  Hire an attorney first. 

4.     File a complaint with the Massachusetts Division of Insurance: If you are dissatisfied with the insurance company’s decision, you may file a complaint with the Massachusetts Division of Insurance. This agency can investigate the matter and take appropriate action, such as ordering the insurance company to pay a claim or imposing fines.

This is technically true.  I have known people to have good results requesting the assistance of the Division of Insurance, more often with health insurance than with liability insurance.  If you file a complaint with the Division and it catches the attention of a staffer who decides that they agree you have been wronged, they may make a phone call or send a letter that will intimidate the insurer into backing down.  But the Division will not get involved in a dispute over the meaning of an insurance exclusion that is best left to the  courts.  Also, be aware that the Division will not work with a policyholder who is represented by counsel.  You can go to the Division and later, if you’re not satisfied with the results there, hire an attorney.  But you can’t do it the other way around. 

If the exclusion is valid and the claim is not covered under your policy, you may be personally responsible for paying any damages or legal costs associated with the claim. In this situation, it’s important to consider your options and to consult with an attorney if necessary.

Agreed. 

My verdict: 

The results from ChatGPT are significantly worse than you would get from a Google search — which will generally lead you to coverage attorneys — and may cause you to lose rights under your policy or pay a claim that should be covered by insurance.  

Nina E. Kallen

Attorney at Law

Nina Kallen has over twenty years of successful experience in civil litigation. She represents both plaintiffs and defendants in state and federal courts throughout Massachusetts. She has a particular expertise in insurance coverage issues and represents insurers and insureds in coverage and bad faith disputes. She has an award-winning blog called Insurance Coverage Law in Massachusetts.

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