The US Court of Appeals for the 11th Circuit has ruled that a professional liability policy issued by Chubb Insurance Company of New Jersey is not ambiguous despite a missing comma, concluding that the policy's language is clear in context.
According to a report from AM Best, the decision centers on a policy covering Constantin, an accounting services firm, for “services directed toward expertise in banking finance, accounting, risk and systems analysis, design and implementation, asset recovery and strategy planning for financial institutions.”
The dispute arose over the absence of a comma between “asset recovery” and “strategy planning.” Constantin argued that the lack of punctuation meant the policy applied broadly to any industry, with only the final clause regarding strategy planning specifically linked to financial institutions.
In contrast, Chubb contended that the phrase “for financial institutions” applied to all preceding services listed in the sentence.
This interpretation was critical because Constantin's claims involved audit work for Schratter Foods, Inc, a food services company, rather than a financial institution. Schratter was subsequently acquired by ECB USA Inc., which sued Constantin over alleged financial statement issues related to the acquisition.
Constantin settled the suit and assigned its rights under the policy to ECB. Chubb denied coverage, asserting that the policy required audit work to be performed for a financial institution.
The appeals court sided with Chubb, emphasizing that courts should not “engage in strained construction to support the imposition of liability or write a better policy for the insured than the one purchased.”
The court found Chubb's interpretation of the policy language more consistent with the intent of the contract, stating that applying “for financial institutions” to all services listed aligns with the series-qualifier canon, which is appropriate in this context and reflects the plain meaning of the contract.
The ruling highlights the importance of precise language in insurance contracts and the judicial preference for interpreting policies as written, avoiding the creation of coverage not explicitly purchased.
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