• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • Sign Up
  • Contact Us
  • Advertise With Us
    • Monthly Banner Ad
    • Sponsor An Email
    • Post A Job
    • Product Launch

Agency Checklists

Massachusetts-inspired Insurance News & More

  • JOBS
  • Checklists
    • Starting Your Own Massachusetts Insurance Agency
    • Purchasing An Insurance Agency in Massachusetts
    • Why, When, & How: Times When A Massachusetts Insurance Agent Should Use A Business Broker
    • Deciding Whether or Not to Outsource Your Customer Service?
    • Employment Contracts & The Non-Compete Clause In Massachusetts
    • Hiring An Insurance Producer In Massachusetts
    • Insurance Agent to Agency Loans In Massachusetts
    • Moving Your Massachusetts Insurance Agency
    • How Premium Financing Can Work For Your Massachusetts Insurance Agency
    • Remuneration Audit Checklist
    • Selling Your Massachusetts Insurance Agency
    • Applying For An Agency Loan
    • When The Auditor Calls
  • Data
  • Events
  • InsurShop
    • Insurance Quiz Time
    • Insurance Books
      • Innovation Titles
      • Improvement
      • Leadership
      • Licensing
      • Marketing
      • Sales
    • Insurance Films
    • Insurance Glossary
  • Partner News
You are here: Home / Insurance Insights | Massachusetts / InsurOp-Eds / InsurOp-Ed: Language vs. Logic

InsurOp-Ed: Language vs. Logic

November 1, 2019 by Bill Wilson

Agency Checklists, MA Insurance News, Mass. Insurance News

Litigation success in coverage disputes following claim denials is often based on which party can make the most compelling case for or against coverage. Bob Smith was a legendary educator for the Florida Association of Insurance Agents. Bob had a saying when it came to arguing coverage:


“If you can’t argue the form, argue logic; if you can’t argue logic, argue the form.”


Where policy language is clear and unambiguous, it usually rules, regardless of whether it makes practical sense or not. There are some exceptions to this general rule, ranging from illusory coverage, policyholder reasonable expectations, violations of public policy, and other legal or contractual doctrines to, frankly, bad judicial decisions derived from incompetent counsel or expert witnesses.

The Hot Tub Claim

For example, due to an unusually severe winter temperature drop, an outdoor hot tub’s plumbing line and pump froze. The homeowners policy excluded the freezing of a plumbing system component but made two exceptions, one being that the exclusion didn’t apply if reasonable care was used to maintain heat in the dwelling, which the insured did.

From a logic standpoint, maintaining heat inside the dwelling has nothing to do with protecting an outdoor plumbing component from freezing. Unfortunately for the insurer, whomever drafted that policy language didn’t consider that possibility. The policy clearly and unambiguously covered damage to any plumbing system component as long as reasonable care was exercised to maintain heat in the dwelling.

Language trumps logic. The insured wins.

The Outdoor Theft Claim

This premise works both ways and can be favorable or disadvantageous to the policyholder. For example, a business had property stolen from a fenced yard on the premises. The building itself was protected by a burglar alarm system and the premium credit granted for the system was applied in exchange for the attachment of a protective safeguards endorsement to the property policy requiring that the alarm system be maintained and functional at all times.

Following the theft of yard property, the adjuster learned that the alarm system was, in fact, not functioning at the time of the loss and denied the claim. It made no difference that, from a logic standpoint, a functional alarm system on the building and not the yard would have done absolutely nothing to prevent the loss. The language in the warranty form was clear and unambiguous.

Language trumps logic. The insurer wins.

And, while an appeal to the adjuster based largely onlogic and not language sometimes works to get a claim paid, especially when policy language is arguably arguable, the strongest argument combines BOTH language and logic. For example, consider the following claim scenarios.

The Boulder Claim

A boulder rolled down a hillside and damaged a structure. (If you ever saw the Chris Farley and David Spade movie “Black Sheep,” you can visualize this.) In another instance, a boulder rolled down a hill, hit a rock ledge and, becoming airborne, flew through the air and through the roof of a building. These are both claims I consulted on that were resolved without litigation.

In both cases, the adjuster denied the claims, citing the “earth movement” exclusions in each policy. Neither “earth movement,” “earth,” nor “movement” were defined in the policy. So, does a giant rolling or falling rock (aka, a boulder) constitutes “earth movement”? I argued that it doesn’t by making a compelling case using logic and reason in interpreting that undefined policy language.

One argument was that, in the case of the airborne boulder, the policy covered “falling objects,” such that if the damage was caused by a nongeological object, there would inarguably be coverage. Here, I’m attempting to make a case almost purely on logic.

For both claims, I researched a number of dictionary definitions of “earth,” including:

…the soft, granular or crumbly part of land; soil; ground; the substance on the land surface of the earth, for example clay or sand, in which plants grow; the softer, friable part of land; soil, especially productive soil

These definitions appeared to view “earth” as a plural term to the extent that “earth” is composed of multiple soil and land particles, not a single stone object. None of them implied that a boulder or lone large rock was “earth.” Part of “earth,” perhaps, but not “earth” in and of itself.

I applied the semantic ambiguity interpretive principle of noscitur a sociis (L. “it is known by its associates”) to the exclusion itself. The exclusion referred to earth movement, including earthquake, landslide, mudslide, mudflow, subsidence, sinkhole collapse, and any other earth movement including earth sinking, rising or shifting. None of these events are generally recognized to involve the rolling or falling of a lone rock. They all involve movement of sizeable expanses of earth, soil, and/or rocks (plural) and not single, solitary geological objects.

Again, implying logic, I asked the adjuster, if a policy covers vandalism and a vandal throws a rock through a plate glass window, would that normally be covered? The answer was, of course it’s covered. So, why isn’t that rock (aka “tiny boulder”) “earth” and it’s propelling through the air “movement,” thus triggering the “earth movement” exclusion? That answer is that makes no logical sense and is certainly not likely the intent of the “earth movement” exclusion as historically viewed as a catastrophic type of exclusion.

Likewise, what about damage caused by a sandstorm or dust storm. Is that not “earth movement” and excluded? Of course not, it’s windstorm damage and covered by most property policies. Much of the damage from a tornado or hurricane is often not just wind damage but rather includes damage caused by objects propelled by the wind. Is damage caused by “earth” distinguished from damage caused by nongeological objects? Of course not. Logic alone dictates otherwise.

Resolving a coverage dispute, with or without litigation, is an exercise in applying the scales of justice. Whoever “wins” the argument is the one with the most compelling case, based on accumulating points based on both language and logic to tilt the scales in one direction.

An interesting footnote to the boulder claims. Not long after resolving one of these claims, I came across a federal court case and a state court case that both found that earth movement exclusions applied to exclude losses under homeowners policies. This raises the question of whether more compelling arguments might have swayed the courts to different decisions. We’ll never know the answer to that but it does illustrate that, if you’re seeking coverage, it might be better to argue your case in front of a more reasonable adjuster rather than a judge.


More about Bill Wilson…

Agency Checklists, MA Insurance News, Mass. Insurance News, Bill Wilson, Insurance Commentary

William C. Wilson, Jr., CPCU, ARM, AIM, AAM is the founder of InsuranceCommentary.com. He retired from the Independent Insurance Agents & Brokers of America in December 2016 where he served as Assoc. VP of Education and Research and was the founder and director of the Big “I” Virtual University for over 17 years.

He is the former Director of Education & Technical Affairs for the Insurers of Tennessee and, prior to that time, he was employed by Insurance Services Office, Inc.  He is a graduate of the Illinois Institute of Technology with a B.S. degree in Fire Protection & Safety Engineering.

Print Friendly, PDF & Email

Filed Under: InsurOp-Eds Tagged With: InsurOp-Ed

Primary Sidebar

Latest Agency Sales

Salem Five Insurance VP Andrew Drayer

A Q&A With Andrew Drayer: Salem Five Insurance’s New Senior VP For Agency Acquisitions And Strategic Growth

Agency Sales in Massachusetts | 2020

Insurance Agency Mergers & Acquisitions in Massachusetts | 2020

Defying All Expectations 2020 Ends Up Being A Boom For Insurance Agency Mergers & Acquisitions

Duffy Insurance Announces 10th Acquisition With Purchase Of The Barry & O’Connor Agency

More Agency Sales

2020 NAIC Market Share Reports

NAIC 2020 Market Share Reports

Comments & Updates

  • Tony Lucacio on Associate General Counsel For Goosehead Insurance Terminated After Participating In January 6th Events In Washington, D.C.
  • Annie on Vermont Mutual Distributes $1,000,000 to COVID-19 Relief Efforts
  • Andrew J. Carpentier on The CAR Year In Review: Highlights From The 2020 Annual Report
  • Frank Lombard CPCU ARM on Time To Act As A Trusted Advisor About Earthquake Insurance?
  • Mike Ryan on InsurOp-Ed: Biden Tax Plan’s Impact on Insurance Agencies

AC In Your Inbox

Massachusetts Law Updates

Insurance Coverage lawsuits Massachusetts

First Circuit Holds Total Pollution Exclusion Does Not Apply Where An Endorsement May Provide Separate Grant Of Coverage

An insurance coverage lawsuit in Massachusetts confirming the importance of reading an insurance policy as a whole versus in parts.

Raynham Agent’s Non-Compete Escape Clause Included In Agency Sale Still Valid After Subsequent Stock Sale

A case deciding whether a non-compete clause included by the former owner of Eagle Insurance in his sale to People’s United Insurance, is still valid after that agency’s subsequent sale to AssuredPartners.

Boston Red Sox And MLB Aim Legal Beanball At Insurers With Billion-Dollar Lawsuit

Boston Red Sox and MLB Aim Legal Beanball At Insurers With Billion-Dollar Lawsuit

30 Major League Baseball teams have filed suit against their 3 insurers seeking $1.6 billion in Business Interruption losses from the COVID-19 shutdowns.

Should Insurance Agents Help Advocate Claims?

Court Rules An Obscure Statute Cured Contract Breach For A Three-Year Delay In Undisputed Claim Payment

A discussion of a recent Appellate Division of the District Court ruling a little-used statute can protect an insurance entity from a breach of contract for the payment of money.

More Mass. Law Updates

CAR News

The CAR Year In Review: Highlights From The 2020 Annual Report

Last Look 2020: The Private Passenger Auto Insurance Marketplace in Massachusetts

Last Look 2020: The Commercial Auto Insurance Market Share in Massachusetts

CAR Begins The RFP Process For Commercial Servicing Carriers And Possible Commercial Pool Changes

View More CAR News

DOI News

Massachusetts Moves Up In 2020 Insurance Regulation Report Card

Mass. Division of Insurance Issues Four COVID-19-Related Bulletins Before 2021

Massachusetts Stays The Course As The 12th Largest Insurance Marketplace

DOI Announces Hearings For Two Separate Insurance Company Acquisitions of Control

View More DOI News

Insurance Fraud

Peabody Contractor Indicted For Insurance Fraud And Payroll Tax Evasion On $2.5 Million Of Under-The-Table Wages

Massachusetts Shares in $39.5 Million Multistate Settlement Agreement Over Insurance Company Data Breach

Arthur J. Gallagher Suffers Ransomware Attack

MA Attorney General Sues Keches Law Firm For Referring Injured Workers On Comp To A Mail-Order Pharmacy For Kickbacks

More Insurance Fraud News

Footer

Agency Checklists

About us
Contact us

14 Summer Street
Suite 102
Malden, MA 02148
617-598-3800
info@agencychecklists.com

Advertise on Agency Checklists

We offer a variety of ways to get help promote your company or product.

Announcements
Email Sponsorships
Partnerships
Custom Collaborations

*Affiliate Disclosure

Please note that any of Agency Checklists’ articles might contain one or more affiliate links. This means that any subsequent purchase resulting from these links may result in a commission for us, but at no additional cost to you. For example, as an Amazon Associate, Agency Checklists earns a commission from all qualifying purchases. By working with affiliates we can continue to keep Agency Checklists subscription free. Thank you for your support.

SEARCH OUR SITE

Explore Our Archives

Copyright © 2021 · Agency Checklists · All rights reserved.