Happy New Year! You know what that means: It's time for your 2016 New Year's Resolutions, and I ask the industry to stop ignoring punctuation.
You may recognize this to be a corollary or logical offshoot of my ongoing resolution of prior years, to “read the forms,” and you would be right. Let's move on to the more precise subset of form-reading at hand. Alert reader “Q” sent me the following question, which relates to a claim involving a carrier-specific liability form:
A producer had a claim denied for either medical payments or bodily injury liability. We contend coverage is present under the Incidental Liability Coverages section 5.a.2. The company contends section 5.a.2 continues on with 5.b. We think that without the existence of conjunctive word AND, 5.a. and 5.b. are separate and distinct. Additionally, there is no semicolon that would link ‘a’ to ‘b’ either. We are looking for coverage for the golf cart “on premise,” but this carrier states that it is not present, and it cannot be made present by any endorsement or other form.
I often see claims questions that cite specific policy provisions; however, one sentence from this question made me want to shout for joy: “Additionally, there is no semicolon that would ‘link’ a. to b. either.”
It’s an all too rare occurrence — crossing the path of a fellow practitioner of proper punctuation! In this day and emoji-awash age, those who even notice punctuation let alone understand the true impact of those humble little characters seem to be too few and far between.
Our friend Q has it exactly right. If the carrier wished to make the two sentences dependent upon each other, a simple semicolon and three letter addition — “and” — would have clarified all. Here is one example from ISO forms in which they use exactly the type of language Q suggests to make clear the form intent:
Business Auto Coverage Form CA 00 01, Owned Autos You Acquire After The Policy Period:
But, if Symbol 7 is entered next to a coverage in Item Two of the Declarations, an “auto” you acquire will be a covered “auto” for that coverage only if:
a. We already cover all “autos” that you own for that coverage or it replaces an “auto“ you previously owned that had that coverage; and
b. You tell us within 30 days after you acquire it that you want us to cover it for that coverage.
Now notice what happens if you replace that semicolon and conjunctive phrasing at the end of “a” in the Business Auto form with a simple period. The two requirements are no longer interrelated and would be read to be separate agreements — in essence, as if the “and” had been replaced by “or.” Those seemingly simple alterations would change everything about how a newly acquired auto will be automatically covered.
For example, assume the current policy language applies to an auto risk currently owning two vehicles. Using a Symbol 7 form, the first car is covered for liability and physical damage, while the second vehicle — an old truck — has liability only. The insured now purchases a third vehicle, a new auto.
What coverage is automatically applied to the new car? Liability only. There is no physical damage because coverages are only added for which “We already cover all autos that you own for that coverage … .” Because the new car is an addition, not a replacement, there is no help from that exception. And if “a” is not true, then “b” is of no help because both must be true or there is no automatic coverage.
Now make that change, either to a period or by replacing the “and” with “or.” Now “a” and “b” are separate statements, and the automatic coverage applies if either is true.
Yet this seemingly simple example of policy wording is often more frequently misunderstood and misconstrued at claims time than far more complex policy provisions. In my insurance classes that I teach, an amazing number of students argue that as long as the insured reports the new vehicle within 30 days, all coverages requested at that time are automatically applied as of the time of acquisition. Wrong. In effect, a significant percentage of insurance professionals are reading the coverage form to be the way they think it to be, not the way it actually is.
In our friend Q's claim, all that was needed was a brief review of the actual form language to find, whether by error or intent, that the included punctuation and conjunctive wording left them entirely separate provisions.
Thus, 5.b. clearly stated there was no general liability coverage for the use of recreational vehicles including golf carts. But 5.a. provided an independent insuring agreement for medical payments and incidental liability (defined by the carrier form) as an additional coverage for any injury occurring on the insured premises, with no limitations or other references.
The carrier had argued 5.b. clearly intended to exclude golf carts no matter where the injury occurred. But by never tying the two provisions together, the carrier allowed each to be read as totally independent of the other. Yes, golf carts were excluded by 5.b, but not for the medical payments or incidentally liability limits provided for injuries falling under 5.a.
When confronted by the disconnect between what the adjuster claimed was the form intent and the actual punctuation and wording, the claims manager reversed his opinion and declared the previously denied claim covered.
And that vision, my friends, is a great way to begin a new year.
Chris Amrhein, AAI, is an insurance educator and speaker, and serves as the chief fun officer at Lorton, Va.-based insuranceisfun.com.
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