Decision centered on one word: “you”
Auto-Owners Mutual Insurance Company was handed a loss earlier this month, with a federal appeals court declaring vague policy language meant the carrier owed compensatory damages to Randy Granger’s wife, Beverly Granger. When Randy Granger got in a car accident and sustained severe injuries, the other driver’s insurance company paid its policy limit of $25,000 which did not cover the medical treatment Granger needed so he went to his own policy for the remainder. Auto-Owners paid out underinsured motorist benefits to him for $250,000, believing the matter settled.
Later, however, came a claim from Beverly Granger, who wanted loss-of-consortium damages for the crash’s impact on her personal life: a decline in affection, care and companionship from her injured husband. Auto-Owners refused the claim and a federal district court granted the company a summary judgement in its favor.
The U.S. Court of Appeals for the Eighth Circuit took a different view. It ruled in favor of Mrs. Granger because of broad phrasing in the policy’s declarations page. Coverage was promised on loss of consortium, stating plainly “you are legally entitled to recover” losses for bodily injuries. The operative word being “you,” because both Randy and Beverly Granger were defined as policyholders, spouses residing under the same roof.
With a few different readings on the table, the court went with the precedent of ambiguity being resolved against the drafter, which was grounded in Missouri law. The onus was on Auto-Owners to be specific in its policy wording. The appeals court derided the policy wording as “poorly drafted, leaving open a question of what it does and does not cover.” The lesson here is that any ambiguity in policy language will be held in favor of the policyholder, so make sure your writing is clear and airtight.
LMA Newsletter of 1-26-26
