Court of Appeals Weighs In On Interpretation of Policy Limits

         About a year ago, we shared a post on the decision of the Court of Special Appeals in Connors v. Gov’t Emples. Ins. Co., 216 Md. App. 418, 88 A.3d 162 (2014).  Following that decision, the Connors, unhappy with the outcome, petitioned the Court of Appeals for review.  The Court granted certiorari and, in Connors v. Govt' Emples. Ins. Co., 442 Md. 466, 113 A.3d 595 (2015), recently considered the question: “[d]o the underinsured motorist provisions of GEICO’s insurance contract provide [the Connors] a limit of underinsured coverage of $300,000 each, subject to an aggregate payment… by GEICO not to exceed $300,000?”  Id. 

As you may recall, Linda Connors and her husband Robert were pedestrians who were struck by a vehicle.  The motorist who struck the Connors had insurance through Allstate with policy limits of $100,000.00 per person and $300,000.00 per accident. The Connors and Allstate eventually settled for the “per person” policy limit of $100,000.00 each.  The Connors were both “insureds” under a motor vehicle policy issued by GEICO, which provided uninsured and underinsured motorist coverage with policy limits of $300,000.00 per person and $300,000.00 per occurrence.  Following their settlement with Allstate, the Connors sought to recover additional damages from GEICO pursuant to the terms of their underinsured motorist policy. Specifically, they sought, based upon their insurance limits of $300,000.00 per person, to have a total of $400,000.00 in policy money still available to them: $200,000.00 for each person after subtracting, from the $300,000.00 limit, the amount already received. 

On appeal, the Connors argued that, based on the construction and comma usage in the policy, the “per person” liability limits are superior to the “per accident” policy limits, and thus $300,000.00 in coverage should be available to each person without an overall occurrence cap of $300,000.00. GEICO argued, and the Court eventually agreed, that the “per accident” limit incorporates the caps on “per person” recovery while still adhering to the “per accident cap.” In many surrounding jurisdictions, any ambiguities in insurance contracts are construed against the insurer as a matter of course. The Court of Appeals in this case declined to address or change that policy, despite the appellants’ request to do the same, and held that the appellants were capped at the “per accident” limit rather than “per person.”

The Connors also argued that the Court of Appeals should overturn the 177 year policy in Maryland that insurance policy ambiguities are not automatically construed against insurers. The policy of construing ambiguities against the insurer as a matter of course is the policy in neighboring jurisdictions. The Court of Appeals ultimately declined to rule definitively on this issue because the Connors’ only asked the Court to interpret their specific contract rather than asking, in their writ of certiorari, for a review of the current law.  However, in the court’s opinion, it was clearly cited that, under the current law, the Court will only construe an insurance policy against the insurer where parole evidence and other extrinsic evidence is unavailable to construe any ambiguities.

Ultimately, agreeing with the Court of Special Appeals, as well as the trial court below, the Court of Appeals found the policy in question to be unambiguous and ruled that the policy includes an aggregate recovery limit of the per occurrence amount of $300,000.00.

         The Connors ruling is important for insurers in the state of Maryland who write under/uninsured policies. Maryland has in the past, and for the time being, will continue to review ambiguities in insurance policies in their entirety, and will turn to extrinsic evidence to determine intent. This is inapposite to the policies of neighboring jurisdictions that construe ambiguities against the insurer as a matter of course. And the Court’s willingness to mention it could signal intent to change the law if the matter is appealed appropriately in another case.  Additionally, the case establishes explicit precedent finding that multiple claimants are not entitled to “per person” liability limits where the limits would exceed the “per accident” liability limits of a policy.