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Contra proferentem rule applied to insurance contracts

It is a fundamental rule of contractual interpretation (all contracts, not just insurance contracts) that an ambiguous contract will be construed against the party who drafted it:
 
The doctrine of contra proferentem operates to protect one party to a contract from ambiguous or confusing drafting by the other party, by interpreting any ambiguity against the drafting party.
(Slater Vecchio LLP v. Cashman, 2013 BCSC 134 at para. 45).
 
The rationale for the contra proferentem is that the party who drafted the contract had an opportunity to choose the words and if they chose them poorly then they should suffer the consequence of the lack of clarity, particularly in the situation of a “contract of adhesion” where the terms are not open to negotiation and simply have to be accepted by the “customer”:
 
[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).
 
Because the contra proferentem is essentially a tiebreaker rule courts have noted that it should only be applied as a last resort i.e. when other rules of construction fail to resolve the ambiguity:
 
It is only where all the rules of construction have failed in assisting in the discovery of the true intention of the parties, that the court is entitled to resort to the contra proferentem rule.
(Frenette v. Metropolitan Life Insurance Co., [1992] 1 S.C.R. 647 at 667).
 
It is not permissible for an insurance contract to state that the principle of contra proferentem does not apply:
 
Equitable insurance principles of subrogation, though not the principle of interpretation contra proferentem, may be altered by the terms of the contract between the parties.
(Somersall v. Friedman, 2002 SCC 59 at para. 56).

 

 
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.