Doctrine of Illusory Coverage Law and Legal Definition

Doctrine of Illusory coverage requires an insurance policy to be interpreted so that it is not merely a delusion to the insured.

The court views the concept of illusory coverage as an independent means to avoid an unreasonable result when a literal reading of an insurance policy unfairly denies coverage. Under the doctrine of illusory coverage, liability insurance contracts should, if possible, be construed so as not to be a delusion to the insured. The illusory coverage doctrine operates to qualify the general rule that courts will enforce an insurance contract as written. [Jostens, Inc. v. Northfield Ins. Co., 527 N.W.2d 116 (Minn. Ct. App. 1995)]