The Art of Proving Your Collectible Loss is “Rare”: Dangers of Blanket Policies
By: Henry M. Quillian III and David Forestner
The insurance coverage purchased in a blanket policy may seem broad, but this broad coverage is then limited by definitions, conditions and exclusions. These terms narrow the perceived coverage and can render the presumed coverage purchased for lost or stolen rare coins or similar collectibles merely an illusion.
Whether it be property coverage for coins, antiques or stamps, the policy definition of what is a “covered loss” can leave the policyholder sorely disappointed. Beware of policy definitions that lead to uncertain ends, which can be argued infinitely by the insurance company to refuse or delay payment to the unwary.
For example, a specialty insurance company may issue worldwide “blanket” policies with special “rare coin” coverage. But the definition of what is “rare” leaves open to subjective argument whether there is any coverage whatsoever: ““Rare” means having an unusual quality, merit or appeal and is seldom found.”
Where must one look to see if the coin at issue is “seldom found”? Who is to determine how seldom it must be found? In what context must the coin be “seldom found”- must the coin be found only in King Tut’s sarcophagus, or rarely found in a child’s piggy bank? These are questions that most lawyers cannot even answer.
Except where the coin is “one of a kind,” the insurance company could always find an expert who would testify that the coin is more than seldom found – somewhere. The best retort is found in well-established law regarding insurance policies, which was repeated in Lee v. Mercury Insurance Co., 343 Ga. App. 729; 808 S.E.2d 116 (2017): The rules of construction for an insurance policy state that any ambiguity is to be construed in favor of coverage.
“Because insurance policies are contracts of adhesion, drawn by the legal draftsman of the insurer, they are to be construed as reasonably understood by an insured.”
Id., citing First Financial Ins. Co. v. American Sandblasting Co., 223 Ga. App. 232 477 SE2d 390 (1996). The Lee court further elaborated that insurance experts are not the proper arbiter of the meaning of an insurance contract. Instead, “[t]he policy should be read as a layman would read it and not as it might be analyzed by an insurance expert or an attorney.” Id., citing Cincinnati Ins. Co. v. Davis, 153 Ga. App. 291, 295, 265 SE2d 102 (1980). That is because “the insurer, in preparing the language of its policy, has the burden of using language that is clear and precise.” Id., citing Ga. Farm Bureau Mut. Ins. Co. v. Meyers, 249 Ga. App. 322, 324 (548 SE2d 67) (2001). Therefore, the court must determine “what a reasonable person in the position of the insured would understand them to mean.” Id., quoting United States Fire Ins. Co. v. Capital Fort Truck Sales, 257 Ga. 77, 78 (1987).
That is not to say that the court is constrained to interpret the policy the way that the policyholder interprets the policy; it still interprets the policy according to its terms as they are written, even if one doesn’t know what the terms actually mean. If the policy is ambiguous, however, the rules shift dramatically in the insured’s favor:
“[I]f a provision of an insurance contract is susceptible of two or more constructions, even when the multiple constructions are all logical and reasonable, it is ambiguous, and the statutory rules of contract construction will be applied.” When a provision of an insurance contract is ambiguous, a well-known rule of construction is that it will be “construed against the party preparing it and in favor of coverage.” “Ambiguity in an insurance policy may [also] be defined as duplicity, indistinctness, an uncertainty of meaning or expression.” (Citation and punctuation omitted.)
Lee, 343 Ga. App. at 733 (reversing summary judgment in favor of insurer on the ground that the coverage language was ambiguous and must be construed against the insurer).
So, under this legal standard, even coins that can be readily purchased, such as U.S. Mint Golden Eagles or Krugerrands, can be found to be rare. Expect, however, that the insurance company will argue vociferously that, whatever item one insured and lost, does not meet the definition of the Policy. To avoid the risk of this fight and the associated cognitive dissonance, it is advisable to buy a policy under which such valuable items are accepted as covered by the insurance company under a scheduled policy at an identified value.