You are here

Ordinary rules of contractual interpretation apply to insurance contracts

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.
When considering interpretation of insurance contracts it is important to keep in mind that they are exactly that, contracts, and that the normal rules of contractual interpretation apply:
While there are some special rules for the interpretation of insurance contracts, the normal rules of contractual interpretation apply and these general rules are the starting point for any interpretation.
(Sunburst Skylight Ltd. v. Lloyd’s Underwriters, 2010 BCSC 714 at para. 21).
As such, the overall purpose of the analysis is to determine the intention of the parties: 
Insurance policies form a special category of contracts. As with all contracts, the terms of the policy must be examined, in light of the surrounding circumstances, in order to determine the intent of the parties and the scope of their understanding. 
(Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21 at para. 27).
When performing the analysis the terms of the contract are paramount:
The focus of insurance policy interpretation should first and foremost be on the language of the policy at issue. General principles of tort law are no substitute for the language of the policy.
(Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33 at para. 35).
Another fundamental rule of contractual interpretation which should be kept in mind is to read the contract as a whole:
[T]he court should give effect to clear language, reading the contract as a whole…
(Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33 at para. 22).
There are a number of insurance context specific interpretation rules that apply when the policy is found to be ambiguous, and some of these are discussed below.