A homeowner in Kentucky – even if he doesn’t read Latin – is thankful that someone does. Noscitur a sociis - a word is known by the company it keeps - is a hoary phrase, tracing its roots at least to the 17th Century and the decisions of Lord Hale. See State v. Murzda, 183 A. 305, 308 (N.J. 1936). It has a deep history too in this country. In Insurance Company v. Boon, 95 U.S. 117, 24 L.Ed. 395 (1877), the Supreme Court was called to determine whether a loss by fire accidentally spreading from a fire set by lawful military authority fell within an exclusion for “any loss or damage by fire which may happen or take place by means of any invasion, insurrection, riot, or civil commotion, or of any military or usurped power.” The Court ruled for the policyholder and held that “military power” in an exclusion capturing riots and insurrections meant only unlawful military power, which was not the cause of the fire; “[t]he maxim noscitur a sociis furnishes, in this case, the true rule of interpretation.”
Turning now to Kentucky and the present, we consider the soggy situation of a Mr. Comley, whose property was inundated when a water main ruptured. Comley v. Auto-Owners Ins. Co., 563 S.W.3d 9 (Ky. 2018). Seeking succor, Mr. Comley turned to his property insurer, Auto-Owners Insurance Company, which declined to assist, citing various exclusions. Mr. Comley brought suit, but the trial court, and then the court of appeals, sided with the insurer.
Indomitable, Mr. Comley appealed to the Kentucky Supreme Court. He argued the insurer’s water damage exclusion did not reach his facts. The exclusion was thus:
We do not cover loss to covered property caused directly or indirectly by …
(3) Water damage meaning:
(a) regardless of the cause, flood, surface water, waves, tidal water, storm surge, or overflow of a body of water. We do not cover
spray from any of these, whether or not driven by the wind;
. . .
(d) water below the surface of the ground. This includes water which exerts pressure on or flows, seeps or leaks through any part
of a building, sidewalk, driveway, swimming pool or other structure.
The Court had two basic issues: was the inundation captured by the specific excluded terms, and if not, how to interpret the catch-all, “regardless of the cause.”
The Court parsed each individual term. Some were easy. A ruptured water main was not storm surge or tidal water. Others were not so obvious. But collectively, the terms told a tale: they “exclude[d] from coverage damage caused entirely by natural forces.” Following a review of Couch on Insurance, the Court stated: “The language of Comley's policy mirrors almost exactly the language discussed by Couch, which is interpreted to exclude from coverage natural water phenomena. What happened here—a public water main line bursting—is not a natural water phenomenon.” (For a similar line of reasoning, see Hatley v. Truck Ins. Exch., 261 Or. 606, 495 P.2d 1196, 1197 (1972)).
But, argued the insurer, “the phrase ‘regardless of the cause’ preceding the enumeration of events comprising ‘water damage’ negates the distinction between naturally occurring versus artificially made water disasters.” Not so, held the Court. “If the event at issue cannot be characterized as one of these naturally occurring events, then the ‘regardless of the cause’ modifier is ineffective.”
Couldn’t the ruptured pipe be characterized as a “flood” or “surface water” or “subsurface water”? No, answered the Court. A flood was an overflow of a body of water, a ruptured pipe was not an overflow (two justices disagreed in a dissent); surface water was not water in a pipe; and subsurface water was not the source of the inundation.
Although the Court never mentioned noscitur a sociis, the concept was front and center. The path to coverage was the distinction between naturally-occurring and artificially-sourced water damage, and that distinction was made by considering the “company kept” by the words of the exclusion.
Insurance coverage will be central to controlling risk in a world of climate change. Knowing how to interpret one’s policies to the fullest advantage will be crucial.