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Interpreting coverage provisions

When interpreting coverage provisions the basic requirement for a fortuity (i.e. an accident) must be kept in mind. For example, even if a policy says that “all risks” are covered, that does not mean that all losses are covered regardless of how they are caused; only “accidental” losses are covered: 
 
In construing these policies it is important to bear in mind that they cover "all risk." These words cannot, of course, be held to cover all damage however caused, for such damage as is inevitable from ordinary wear and tear and inevitable depreciation is not within the policies…Damage…if it is to be covered by policies such as these, must be due to some fortuitous circumstance or casualty.
(British & Foreign Marine Insurance Co. v. Gaunt, [1921] 2 A.C. 41 90 L.J. (K.B.) 801, 125 L.T. 491, 37 T.L.R. 632 (H.L.) at 46-47).
 
When an insurance company denies coverage it is up to the insured to prove to the court that the loss was caused by a covered risk:
 
The onus is on the insured, Progressive, to show that the pleadings fall within the initial grant of coverage.
(Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33 at para. 29).
 
However, in a CGL policy for example, the insured is not required to prove the exact cause of the loss but need only show that the loss likely occurred as a result of a covered risk:
 
[To establish his case the plaintiff must show] that the loss comes within the terms of his policies; but where all risks are covered by the policy and not merely risks of a specified class or classes, the plaintiff discharges his special onus when he has proved that the loss was caused by some event covered by the general expression, and he is not bound to go further and prove the exact nature of the accident or casualty which, in fact, occasioned his loss.
(British & Foreign Marine Insurance Co. v. Gaunt, [1921] 2 A.C. 41 90 L.J. (K.B.) 801, 125 L.T. 491, 37 T.L.R. 632 (H.L.)).
 
It is a rule of interpretation of insurance contracts that in the event of ambiguity coverage provisions are to be interpreted broadly:
 
[T]he courts should be aware of the unequal bargaining power at work in the negotiation of an insurance contract and interpret it accordingly.  This is done in two ways: (1) through the application of the contra proferentem rule; (2) through the broad interpretation of coverage provisions and the narrow interpretation of exclusions. These rules require that ambiguities be construed against the drafter.  In most policies, the drafter is the insurer and the insured is essentially required to adhere to the terms set out by the insurer…
(Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21 at para. 28, emphasis added).
 
Similarly:
 
[C]overage provisions are interpreted broadly, and exclusion clauses narrowly
(Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33 at para. 24).

 

 
This book was written by Michael Dew, a Vancouver lawyer who practices civil litigation, including representing persons who have been denied coverage under property insurance policies, or liability insurance policies. If you have been denied insurance coverage and require assistance with making a claim against your insurer call Michael at 604 895 3160.