Despite the best efforts of everyone involved in the drafting process, insurance policies sometimes contain typographical errors. Usually it is a no harm—no foul situation. Perhaps the provision in the policy never becomes relevant in a claim. Or it may be that, while the typo appears in a provision at issue, it is overlooked because there is no basis for any alternative meaning. But in Bluemile, Inc. v. Atlas Industrial Contractors, Ltd., No. 12CV5597 (Ct. Comm. Pl. Ohio Feb. 25, 2014) the court was confronted with a typographical error in a policy that altered its meaning -- but such altered meaning made no sense and the likely intended meaning was easy to see.

Bluemile, Inc. provides cloud, network, data hosting and phone services. On February 10, 2011, Bluemile suffered an outage that caused a disruption in services from 7:36 a.m. to 9:45 a.m. Bluemile alleged that it suffered damages in excess of $7,000,000. Bluemile was insured under a policy with Hartford that provided Business Income and Extended Business Income (“EBI”) coverage. Hartford paid Bluemile $514,898 toward its claim for Business Income coverage. However, the parties disputed the length of time for EBI Coverage.

The EBI language in Bluemile’s policy stated:

Extended Business Income

We will pay for the actual loss of Business Income you
incur during the period that:

(1) Begins on the date property is actually repaired, rebuilt
or replaced and “operations” are (sic) resume; and

(2) Ends on the earlier of:

a. The date you could restore your “operations”
with reasonable speed, to the condition that
would have existed if no direct physical loss or
physical damage occurred; or

b. 90 consecutive days after the date determined in
(a) above.

Bluemile and Hartford disputed the language in subsection 2(b). Bluemile argued that subsection 2(a) governed the length of EBI coverage, while Hartford maintained that there was a typographical error in subsection 2(b) and the length of time is 90 days from the date of repair.

Despite the fact that Bluemile’s interpretation made no sense compared to Hartford’s, the court applied the altered meaning of the policy – one that favored the insured. The court does not do a great job of explaining how the typographical error altered the specifics of the claim from a monetary perspective, but it does explain how it reached its decision.

Hartford conceded that there was no ambiguity in Bluemile’s insurance policy, but nevertheless argued that the EBI provision was subject to an alternative, more reasonable interpretation.

The court was mindful that, when construing an insurance contract, if a doubtful condition written in a contract would make that condition meaningless, and it was possible to give it another construction that would give it meaning and purpose, then the latter construction must apply. Here, the Bluemile court was quick to point out that it was not being asked to interpret ambiguous language, but, rather, a typographical error—specifically whether section (a) referenced in 2(b) of Bluemile’s EBI coverage provision was really supposed to be a (1).

The court held that: “Because the issue is not one of ambiguity, the Court cannot look beyond the language of the contract. Thus, the various editions of the Special Property Coverage Form and Actual Loss Sustained endorsements provided by Hartford cannot, as a matter of law, be used as guidance on this issue.”

Hartford pointed to several cases in which courts corrected typographical errors to accurately reflect the intentions of the parties. However, the court declined to follow them: “While that may be acceptable in some instances, in none of those cases did doing so fundamentally alter the provisions in the policy. Here, the error is not one where the contract stated ‘included’ instead of ‘including.’ That is an obvious error. Here, the alleged error is (sic) refers to subsection (1) instead of subsection (a). The alleged error is not obvious because it refers to valid provision (sic) in the policy. While Hartford’s interpretation does appear to make more sense, the Court still (sic) consider whether it can rewrite the terms of the policy.” Courts that live in glass houses…

The court concluded that, “upon serious consideration,” it could not. First, because the court was not confronted with a question of ambiguity, it could not look beyond the contract to determine the intent of the parties. In addition, the court could not ignore the fact that the alleged error existed for seven years and was not discovered until after Bluemile submitted its claim for coverage.

For all of these reasons, the court held: [T]he law is clear that, when in doubt, insurance policies must be liberally construed in favor of the insured and strictly against the insurer. Because the alleged error has existed for seven years and was not discovered until after Bluemile submitted its claim for coverage, it would be inequitable to deny Bluemile the coverage it reasonably believed it had under the policy as written.”