The saying goes like this, “Say what you mean, and mean what you say.” We all know the business of contract construction is no easy task. But underwriters should go the extra mile to ensure a property insurance policy reads as the carrier intends or steep consequences may ensue. Something as minor as a misplaced comma or semicolon could be consequential in deciding whether an insured is entitled to coverage under the policy.

In a recent decision, the Georgia Court of Appeals reversed a trial court’s grant of summary judgment to an insurer where the appellate court found coverage turned on the placement of a semicolon.1 The court addressed whether a homeowner was entitled to coverage for property damage to a secondary home when the policy terms arguably confined coverage to primary residences. The court interpreted the policy to include both primary and secondary residences based on the semicolon placement in the policy’s “residence premises” definition.

Ronald Lee frequently traveled from Crestview, Florida to Winder, Georgia. In December 2007, Lee purchased a second home in Riverdale from Jim Constable, a longtime friend facing financial strain. Lee paid the mortgage and allowed Constable’s family to live in the home rent-free in exchange for allowing Lee to stay during travel.

In 2010, Lee contacted Lawrence Arnold—an insurance agent and close friend of Constable—to obtain insurance on the home. Lee spoke with Arnold over the telephone providing him with the required information to complete the application. According to Lee, Arnold knew he did not live at the residence full-time, but stayed frequently because he traveled for work.

On Lee’s application, the boxes were marked beside “Primary” and “Occupied by Named Insured.” The boxes beside “Secondary” and “Additional Residence for Insured” were both blank. A separate section listed Lee and Constable’s family as named household residents. All application answers were typed and none were in Lee’s handwriting.

In May 2012, a fire destroyed the home, leaving Constable deceased and Constable’s daughter with serious injuries. Mercury Insurance Company denied Lee’s claim because the home was not his primary residence. The case went into suit, and the Georgia Court of Appeals looked to the definition of “residence premises” in rendering a decision.

The policy read as follows:

‘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 court found the semicolon placement, in the definition, could reasonably lead a policyholder to read the provision as covering both primary and secondary residences.

Punctuation is an important indicator of meaning, the court explained when it determined a layperson could read the “residence premises” definition as having two separate, consecutive clauses (definitions) dependent alike on the preceding word “means.”2 It rejected Mercury’s argument that the policy should be read as if omitting the semicolon. Removing the semicolon would require the court to interpret the contract as excluding coverage for secondary homes, such as a beach or mountain home.

The court emphasized that Mercury could have easily used the word “your” instead of “a” in the clause preceding the semicolon if it intended to provide coverage exclusively for the insured’s primary residence. This simple substitution would allow the clause to read: “We cover the dwelling on the residence premises shown in the Declarations used principally as [your] private residence.” Accordingly, the policy provision, as written, covered the Riverdale house as either a primary or secondary home because it was used principally as a private residence.

Let this decision be an important reminder for both insurance carriers and policyholders alike. Punctuation matters. Something as small as the placement of a comma, semicolon, or colon may seem insignificant; but it may be pivotal to a policyholder’s entitlement to coverage. Read your insurance policy cover to cover, and recognize that even the mundane details carry weight. In conclusion, policyholders should contact a qualified insurance professional if faced with a denied or undervalued property insurance claim. It is important to seek a second opinion from a property insurance attorney trained to recognize the minutiae of the policy terms.
1 Lee v. Mercury Ins. Co. of Georgia, No. A17A0624 (Ga.Ct.App. Nov. 3, 2017).
2 Id. at 4 (quoting Hill v. Nationwide Mut. Fire Ins. Co., 448 S.E.2d 747 (Ga.Ct.App. 1994)). The court quoted other Georgia opinions, all of which, followed a similar decision-making process. See e.g., Springtime, Inc. v. Douglas County, 187 S.E.2d 874 (Ga. 1972). The court also addressed its decision in Georgia Intl. Life Ins. Co. v. Bear’s Den, 292 S.E.2d 502 (Ga.Ct.App. 1982), where it held the lack of an “and” or an “or,” subsequent to a comma, created an ambiguity in the insurance policy with respect to trigger of coverage.