In what might be the most expensive punctuation mistake in history, a single comma in an insurance contract cost a company a staggering $10 million in claims. The incident, which has since become legendary in legal and insurance circles, demonstrates how the smallest details can have enormous financial consequences.

The Costly Comma

The dispute centered around a contract clause that read: "This insurance shall not cover any loss or damage to property caused by a peril not specifically described herein, however, loss by fire, explosion or smoke shall be covered."

Insurance law experts say the comma after "however" was the culprit. The insurer intended the clause to mean that only fire, explosion and smoke damage would be covered if caused by a peril not otherwise described. But the policyholder argued—successfully—that the comma created a separate independent clause, meaning that ALL fire, explosion and smoke damage was covered, regardless of cause.

The Court Battle

When a manufacturing facility suffered extensive damage from a fire triggered by an earthquake (a peril not covered in the policy), the company filed a $10 million claim. The insurer initially denied coverage, pointing to their intended meaning of the clause.

The case eventually reached the state supreme court, where judges ruled in favor of the policyholder. The court's opinion stated: "While the insurer may have intended a different meaning, the policy's punctuation created an ambiguity that must be resolved in favor of the insured."

Industry-Wide Changes

Following this costly grammatical error, the insurance industry implemented more rigorous contract review processes:

• Many firms now employ specialized legal editors
• Contract language is tested against multiple interpretations
• Some companies have developed AI tools to detect ambiguous punctuation

Lessons Learned

The case serves as a powerful reminder of precision's importance in legal documents. As one insurance executive noted: "We now spend ten times more on contract editing than we did before, but that's still a bargain compared to a $10 million comma."

For consumers, the lesson is equally valuable: understanding exactly what your policy covers—down to the punctuation—can be the difference between a denied claim and a multi-million dollar payout.