Insurance Exclusions: When is a Comma Worth One Million Dollars?

Insurance exclusions take away coverage for damages you might otherwise think are covered in an insurance policy.  Insurance exclusions often appear as a clause in an insurance policy that eliminates coverage for specified events.  For example, homeowner’s policies often exclude coverage for flood damage.

Simple, right?

Anyone actually sitting down and reading insurance policy language knows it may not be so simple.  Insurance policy language challenges even legal experts and courts.

Insurance Exclusions – Events Not Covered

Consider the case of a man in Brockton, MA who went into a bar and ended up seriously injured in a bar brawl.

Catastrophic personal injuries impacted the man so severely that the tavern’s insurance company initially offered a $1.2 million settlement.  But the insurance company then reversed itself.  It claimed the tavern’s general liability policy included a clause excluding coverage for assault and battery taking place in the bar.

When is a Comma Worth A Million Dollars?

In this case the insurance policy covering the bar included the following language excluding coverage for injuries

“arising out of an assault or battery, provoked or unprovoked, or out of any act or omission in connection with prevention or suppression of an assault or battery, committed by any insured or an employee or agent of the insured.”

The issue presented to the court required determining whether the above phrase excluded coverage for those injured by an assault and battery on the bar premises not committed by an employee.

Attorneys for the man injured argued that the words ‘committed by’ applied to an assault or battery, meaning that only assaults committed by employees or agents of the tavern are excluded.

But the court said they were wrong.

The court held that the comma before the words ‘committed by’ attached the committed by language only to the words “act or omission”.  This meant that the assault or battery language stood alone.  Assault and batteries are not covered.

Injuries, Commas & Insurance Exclusions

The insurance attorneys themselves admitted that the policy language was awkward.  But, the court here held that the placement of the comma was plain and clear, the insurance company was off the hook, and the million-dollar settlement was down the drain.

A basic rule in looking at insurance policy language holds that if there is more than one rational interpretation of policy language, then the policy is construed against the insurance company and in favor of the person or entity insured.  But, even if others were confused, the court was not and apparently felt no one else should be either.

The case of Certain Interested Underwriters at Lloyds, London v. LeMons was decided by the Massachusetts Appeals Court June 4, 2014.

One of the first things insurance companies do after an initial report of injury is to examine the facts and the actual language of the applicable insurance policy to determine if the event or loss is in fact covered.  If an exclusion exists, coverage is disclaimed.

I suspect strict grammarians aren’t unanimously clapping their hands with the above case.  This may or may not be the end for the case as there’s one final potential appeal.  The Massachusetts Supreme Judicial Court has the option to refuse to consider the case.  Any update will be posted here.

Attorney Andrew D. Myers is a personal injury and bankruptcy attorney in Massachusetts and New Hampshire.  The office has posted over 150 blog articles largely covering personal injury law and bankruptcy.  Click here for an index to popular articles.

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