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Interpreting the Intent of Parties Entering into an Insurance Contract is a Question of Law for the Courts

September 22, 2017

            Following an automobile accident in which Russell Brent Musgrove, Sr. and Karen Wallace Musgrove (“the Musgroves”) were killed, their sons (the “Plaintiffs”) filed a wrongful death suit against the other driver and Allstate Property and Casualty Insurance Property (“Allstate”).  Allstate Prop. & Cas. Ins. Co. v. Musgrove, 2017 WL 3634124 (Ga. Ct. App. 2017).  The Musgroves insured five vehicles with Allstate under two policies with different numbers.  They were also covered by additional uninsured motorist (“UM”) coverage with limits of $250,000 per person/$500,000 per accident.  The Plaintiffs claimed that the UM coverage applied to both policies.  Allstate filed a motion for summary judgment, arguing that despite the different policy numbers, the Musgroves had a single automobile policy with $500,000 in UM coverage.  On August 24, 2017, the Georgia Court of Appeals granted Allstate’s motion, holding that the policy declarations were unambiguous that the Musgroves had only one policy with UM coverage in the amount of $250,000 per person/$500,000 per accident.  Id.

 

            The Georgia Court of Appeals relied on the basic principles of contract law to determine the intent of the parties with respect to the insurance contract.  Generally, this “presents a question of law for the court unless language in the policy creates an ambiguity that cannot be resolved by the rules of construction.”  Varsalona v. Auto–Owners Ins. Co., 281 Ga. App. 644, 645 (2006).  Further, construction of an insurance contract is not permissible by the court when the language is plain, unambiguous, and capable of only one reasonable interpretation.  Id.  Here, the Musgroves were issued two policies; however, the declarations page stated, “all your vehicles are insured under one single policy, which means you'll only have one policy effective date and receive only one bill for the coverage of these vehicles.” Therefore, the Court held that it was unambiguous that Allstate had issued one contract, albeit in two sections.  Musgrove at 2.

 

            Alternatively, assuming that the contract language was ambiguous as to whether the Musgroves were purchasing one or two insurance policies, the parol evidence showed that there was only one policy.  Id. citing American Cyanamid Co. v. Ring, 248 Ga. 673, 674 (1982) (“while, generally, an ambiguity in a contract may be explained by parol evidence, parol evidence is inadmissible to add to, take from or vary a written contract.”).  An Allstate employee submitted an affidavit in which he testified that Allstate’s computer system only allowed four vehicles to be included under one policy number and Allstate would issue a second policy number when necessary.  The court held it was clear that Allstate entered into a single insurance contract with the Musgroves that issued a single bill, with a single premium, and which referenced both policy numbers.  Id.  Accordingly, the Georgia Court of Appeals granted summary judgment to Allstate.

 

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