When Language Matters: A crucial insurance dispute over a single word

A powerful man once said under oath: “It depends on what the meaning of the word ‘is’ is,” and in the nuanced world of litigation, the interpretation of a single word, like is, can have profound implications. This was vividly demonstrated in a recent case in the Northern District of Georgia, United Minerals and Properties, Inc. v. The Phoenix Insurance Co., No. 23-cv-00050 (N.D. Ga. Oct. 26, 2023), which hinged upon the definition and use of the word "is."

"Ambiguity serves neither party and can result in unexpected legal confrontations."

The Dispute

In this case, the underlying dispute involved a claimant’s assertion that they developed mesothelioma due to asbestos in a talc product used during medical procedures. United Minerals and Properties, Inc., the insured, contended its product did not, in fact, contain asbestos. The insurer, Phoenix Insurance Company, denied coverage based upon the policy’s asbestos exclusion, which precluded coverage for bodily injury “arising out of the actual or alleged presence or actual, alleged or threatened dispersal of asbestos, asbestos fibers or products containing asbestos, provided that the ‘bodily injury’ . . . is caused or contributed to by the hazardous properties of asbestos.” Phoenix’s argument was straightforward: since the claimant’s lawsuit alleged asbestos-related injuries, the exclusion should apply absolutely, regardless of the product’s actual asbestos content. This interpretation would exempt the insurer from defending the insured.

The “IS” Debate Unfolds

After closer examination, however, the court noted that exclusionary language for injuries arising from the actual or alleged presence of asbestos “cannot be read in isolation.” Pursuant to the policy, the exclusion applied “provided that the injury or damage is caused or contributed to by the hazardous properties of the asbestos.” The court held that “[t]he presence of the word ‘is’ in this clause implies that the asbestos must be present for the exclusion to apply,” thus creating an ambiguity that must be resolved in favor of the insured.

In essence, United Minerals maintained that its product was asbestos-free, and the insurer’s obligation to defend remained intact despite contrary allegations. Arguably a stretch by the court, the ruling is nevertheless a strong reminder to assess and determine the scope of the covered risk and to avoid potential ambiguity, especially in exclusionary language. This case offers a stark reminder of the power language holds in policy interpretation, a cautionary tale for insurers and insureds alike. The subtle difference between what "is" and is alleged can make all the difference in the world of coverage disputes.

Impact of Policy Language in Litigation

To prevent such conflicting interpretations, insurers must meticulously scrutinize and refine policy language, focusing on the true scope of exclusions and defined risks. Ambiguity serves neither party and can result in unexpected legal confrontations, as proven by the case at hand.

From the United Minerals case, the lesson remains simple – as complex as insurance coverage can be – words matter. To avoid potential coverage disputes in the future, insurers should be sure to follow these seven crucial tips:

1. Clarify Policy Language: Ensure that all policy language is clear and unambiguous, especially regarding exclusions. Specificity can prevent misunderstandings regarding the intention of the coverage.
2. Review Exclusions in Detail: Companies should closely examine any exclusionary clauses and understand the exact scenarios under which the exclusion applies. Consider how the "alleged" vs. "actual" presence of materials or circumstances can impact coverage.
3. Document Policy Negotiations: Keep detailed records of all understandings, requests and agreements made during the underwriting process, as they may become crucial in interpreting policy language during disputes.
4. Consult Legal Experts: Engage legal counsel to review policy documents, particularly in areas prone to litigation, such as asbestos injuries, to ensure that terms meet the insured's needs and anticipate potential areas of contention.
5. Train Staff on Policy Details: Ensure that individuals within the organization responsible for managing insurance policies are well-trained and understand the implications of policy language to avoid missteps.
6. Maintain Evidence of Compliance and Safety: Have documentation readily available to support claims of safety compliance and product integrity, as an insured would, for example, have to assert that their product contained no asbestos.
7. Regular Policy Reviews and Updates: Periodically review and update insurance policies to align with industry trends, legal precedents, and company risk profile changes. This can help maintain adequate coverage over time and avoid gaps that could lead to disputes.

Implementing these strategies can help companies navigate the complex landscape of insurance coverage and minimize the risk of costly litigation and denial of coverage when claims arise.