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Avoid windfalls and other commercially unrealistic results when interpreting insurance contracts

A further rule that may be applied to resolve ambiguity in insurance policies is that windfalls to the insurer (e.g. premiums being paid for little risk being taken by the insurer), or an unanticipated recovery to the insured, are to be avoided:
 
[T]he courts should try to give effect to the reasonable expectations of the parties, without reading in windfalls in favour of any of them.  In essence, "the courts should be loath to support a construction which would either enable the insurer to pocket the premium without risk or the insured to achieve a recovery which could neither be sensibly sought nor anticipated at the time of the contract".
(Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21 at para. 29).
 
Similarly:
 
The courts have developed a number of general interpretative principles that reflect a concern that customers not suffer from the imbalance of power that often exists between insurers and the insured but, on the other hand, that customers obtain no greater coverage than they are prepared to pay for. The exercise of interpretation should avoid "an unrealistic result or a result which would not be contemplated in the commercial atmosphere in which the insurance was contracted": Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888, per Estey J., at p. 901.
(Co-operators Life Insurance Co. v. Gibbens, 2009 SCC 59 at para. 20).

 

 
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.