Title Bout: Second Circuit Limits Parties' Control Over Construction Of Policies

Like other contracts, insurance policies are divided into parts, and most of the parts appear under headings or captions. A separate contract term (known as a "titles clause" or a "headings clause") sometimes specifies that the titles should not affect the interpretation of the policy. But a catchy title can be hard to resist. This week, in Infrassure, Ltd. v. First Mut. Transp. Assurance Co., No. 16-306 (2d Cir., Nov. 16, 2016), the U.S. Court of Appeals for the Second Circuit ruled that a titles clause did not prevent consideration of language in a heading, which the court took to be an "express indication as to the context in which a particular provision is operative." Because the ruling relied on judgments that are difficult to explain, it potentially opens a new frontier for disputes over contract interpretation.