The U.S. Court of Appeals for the Eleventh Circuit has ruled that a professional liability policy issued by Chubb Insurance Co. of New Jersey is not ambiguous despite a missing comma, concluding that the policy’s language is clear in its context.

According to a report by AM Best, the decision focuses on a policy covering Constantine, an accounting services firm, in relation to “expertise-oriented services in banking finance, accounting, risk analysis, systems, design and implementation, asset recovery and strategic planning for financial institutions.”

The dispute arose over the absence of a comma between “asset recovery” and “strategic planning.” Constantine argued that the lack of punctuation meant that the policy applied broadly to any industry, with only the latter clause relating to strategic planning specifically to financial institutions.

In contrast, Chubb argued that the phrase “for financial institutions” applied to all of the previous services mentioned in the sentence.

This explanation was significant because Constantine’s allegations related to auditing work for Schratter Foods, a food service company, not a financial institution. Schratter was later acquired by ECB USA, which sued Constantine over alleged financial statement issues related to the acquisition.

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Constantin settled the case and waived its rights under the policy to the ECB. Chubb declined coverage, arguing that the policy required audits to be performed on behalf of a financial institution.

The appeals court sided with Chubb, holding that courts should not “resort to strained interpretations to support the imposition of liability or to write a policy that is better for the insured than the one purchased.”

The court found that Chubb’s interpretation of the policy language was more consistent with the intent of the contract, noting that applying “to financial institutions” to all listed services is consistent with the sequential qualification standard, 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 to interpret policies as written, avoiding creating coverage that was not expressly purchased.

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