Ambiguous policy wording favours insured, not insurer

Ambiguity in policy wording often benefits the insured and not the insurer, Anthony Cole, an associate at McCague Peacock Borlack McInnis & Lloyd LLP, told attendees at the Canadian Independent Adjusters’ Association [CIAA]’s Ontario regional educational seminar.

“Ambiguity is sort of in the eye of the beholder.” Cole said. “[Policy is] not always as clear as the drafter intended.”

Be aware of industry jargon, which often does not have any meaning to the insured and is often not very compelling to the courts, Cole warned.

The same goes for fancy grammar. While a sentence might be grammatically correct, if it can be interpreted another way, or if another meaning tends to be more common (even if it is incorrect), it is best to reword the sentence so that there is no confusion in meaning. Cole noted the case of “nor.” The correct meaning of “nor” is “and not,” yet most people think it means “or.”

This can cause confusion in the interpretation of a policy, he suggested.

Cole said reviewing and re-reading the policy should help to ensure there is no discrepancy or room for misinterpretation. “If a word has broad implications … think of how an insured might interpret that,” he said. “Carefully read and carefully draft your policies … from the perspective of the insured.”

Cole observed “the court is going to go with the insured more often than not.”