Ambiguous Punctuation Can Lead to Insurance Coverage Following a Loss

A court in Georgia found coverage for a loss based on the presence of a semicolon. In the case Lee v. Mercury Insurance Company,¹ the court found coverage for a home destroyed by fire based on the potential ambiguity created by a semicolon.

In Lee, Ronald Lee (“Mr. Lee”) purchased a home in Georgia and allowed his friend, Jim Constable (Mr. Constable”), to live there with his family rent-free. Mr. Lee purchased a homeowner’s insurance policy for the home through an insurance agent. Mr. Lee completed the application over the phone. Since Mr. Lee was not present, he asked the agent if Mr. Constable could sign his name, and the agent replied that that was fine. Mr. Lee alleged that the insurance agent knew that he would not be residing at the home full-time, but would be “stopping in” since he traveled. Mr. Lee stated that the insurance agent knew that Mr. Constable resided at the property instead of Mr. Lee. The answers to the application were typed; one section of the application requested the applicant to “Check all that apply”, and an “X” was marked beside “Primary” and “Occupied by Named Insured.” The “Secondary” and “Additional Residence for Insured” were not marked with an “X.” Mr. Lee, Mr. Constable, and Mr. Constable’s family were listed as residents of the household.

The property was later destroyed by a fire that took Mr. Constable’s life. Mr. Lee filed a claim with the insurance carrier, Mercury Insurance Company of Georgia (“Mercury”), which denied his claim.

Mr. Lee brought suit against Mercury. Mercury moved for summary judgment on the basis that it was misrepresented on the policy application that the home was Mr. Lee’s primary residence, when he did not reside there as required by the policy.

The trial court granted Mercury’s motion and he appealed.

The policy contained the following language:

COVERAGE A — DWELLING:

We cover:

the dwelling on the residence premises shown in the Declarations used principally as a private residence, including structures attached to the dwelling; materials and supplies located on the residence premises used to construct, alter or repair the dwelling or other structures on the residence premises.…
* * * * *
Residence premises means the one, two, three or four family dwelling, condominium or rental unit, other than structures and grounds, used principally as a private residence; where you reside and which is shown in the Declarations.

The appellate court reversed the trial court’s rulings on both motions for summary judgment. The appellate court ruled that the definition of “residence premises” could be read as having two different definitions, based on the placement of the semicolon, which is typically used in, “marking off a series of sentences or clauses of coordinate value.” The court further observed that a semicolon is used to mark, “separate consecutive phrases or clauses which are independent of each other grammatically, but dependent alike on some word preceding or following.” Id. at 734. The appellate court concluded that the above policy language could be read to mean, “the one, two, three or four family dwelling condominium or rental unit, other than structures and grounds, used principally as a private residence” or “where you reside and which is shown in the Declarations.”

Ambiguity in insurance policies is construed in a light most favorable to the insured, which is what occurred in this case. Other courts have ruled in a similar fashion.
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¹ Lee v. Mercury Ins. Co., No. A17A0624 (Ga. App. Nov. 3, 2017).