An insurer's vague policy wording has backfired after a federal appeals court ruled that "poorly drafted" language must be read in favor of the insured.
In a decision filed on January 14, 2026, the United States Court of Appeals for the Eighth Circuit reversed a lower court ruling against Auto-Owners Mutual Insurance Company, finding that the company's underinsured motorist policy language was ambiguous and could not be used to deny a spouse's loss-of-consortium claim.
The dispute in Auto-Owners Mutual Insurance Company v. Beverly Granger began with a car accident that left Randy Granger with severe injuries. The other driver's insurer paid out to its policy limit of $25,000, which fell short of what Randy needed to cover his injuries. He turned to his own Auto-Owners policy for underinsured motorist benefits and received the per-person limit of $250,000.
Then came the twist. Beverly Granger, Randy's wife, filed her own claim under the same policy. She sought loss-of-consortium damages for the decline in affection, care, companionship, and services she experienced because of her husband's injuries.
Auto-Owners refused. The insurer treated Beverly's request as purely derivative of Randy's and argued that the per-person limit for underinsured motorist benefits had already been reached. The company went to federal court first, seeking a declaration that it owed nothing more to the Grangers. Beverly counterclaimed for breach of contract.
The district court sided with Auto-Owners at summary judgment, reasoning that Beverly's consortium claim "necessarily and inseparably" followed the one covering Randy's injuries.
The Eighth Circuit saw it differently.
At the heart of the case was one small word with big consequences: "you." The policy's declarations page listed both Randy and Beverly as named insureds. The coverage section promised to pay compensatory damages, including loss of consortium, that "you are legally entitled to recover" for "bodily injury you sustain." The policy defined "you" as any named insured and their spouse residing in the same household.
The appeals court found that definition opened the door to two reasonable readings. One interpretation ties all recovery to the person who suffered bodily injury. But another, grounded in Missouri law, recognizes that loss-of-consortium claims belong to the uninjured spouse and compensate for the different losses the two spouses suffer.
With two plausible interpretations on the table, the court applied a familiar rule: ambiguity gets resolved against the drafter. Auto-Owners wrote the policy, and the court adopted the interpretation that favors Beverly, allowing her to recover loss-of-consortium damages.
The court did not mince words, calling the policy "poorly drafted, leaving open a question of what it does and does not cover."
The ruling underscores a familiar principle: when policy language leaves room for interpretation, courts construe ambiguity against the drafter.
