46) Policy Consideration Brissette However, mindful of following policy concerns: K pre-supposes 2 sided relationship, but actually is a take it or leave it standard form K Limited/no negotiation between insured and insurer Unequal bargaining power Inequality concerns are not necessarily absent in negotiated or custom policies Potentially different understandings of scope/terms by insured and insurer, full of technical, legal jargon—hard to understand Therefore, require insurance companies to clearly set out their intention in the policy wording Test Consolidated Principles of insurance contract interpretation are applied in accordance with Bathurst v. the two step test from this case. Mutual Boiler STEP ONE: Consolidated Apply general principles to find an If this can be done using the Bathurst v. interpretation of the K which reflects the general principles, and there is no Mutual Boiler true intentions of the parties at the time remaining ambiguity in the they entered into the K. language. STOP HEREdon’t do step two. Undefined terms given there “plain, Critique: ordinary and popular” meaning, “such Fictional as the average policy holder of Terms and conditions are ordinary intelligence, as well as the mandated by statute or insurer, would attach to it” (at 901) regulations, e.g. auto, Use the plan and ordinary meaning of general insurance Ks, defined terms subject to parties’ accident and sickness, fire intention as evidenced from the entire coverage policy Limited scope of If a word has multiple meanings, choose the one that reasonably timing is really promotes parties’ intentions negotiated Holistic interpretation to achieve Commercially sensible commercially reasonable interpretation often goes let technical against insured’s interests. definition/interpretation result in coverage for predictable losses, avoid windfall to insurer or unanticipated recovery to insured Don’t interpret in a way that negates the overall objective of the K Corbould Policy excluded pollution. Underground Thus, the parties intended to oil-tank leaked did this fall under the exclude pollution and the parties meaning of pollution? intentions prevail. HELD: yes, no ambiguity, plain and Don’t apply reasonable ordinary meaning of exclusion clause expectations or principles under excludes damage by step two if no ambiguity!! contamination/pollution. STEP TWO Consolidated Where the language is ambiguous, in that i.e. where step one failed to find Bathurst v. there are multiple reasonable meanings or the answer
46) Policy Consideration Brissette However, mindful of following policy concerns: K pre-supposes 2 sided relationship, but actually is a take it or leave it standard form K Limited/no negotiation between insured and insurer Unequal bargaining power Inequality concerns are not necessarily absent in negotiated or custom policies Potentially different understandings of scope/terms by insured and insurer, full of technical, legal jargon—hard to understand Therefore, require insurance companies to clearly set out their intention in the policy wording Test Consolidated Bathurst v. Mutual Boiler Principles of insurance contract interpretation are applied in accordance with the two step test from this case. STEP ONE: Consolidated Bathurst v. Mutual Boiler Apply general principles to find an interpretation of the K which reflects the true intentions of the parties at the time they entered into the K. If this can be done using the general principles, and there is no remaining ambiguity in the language. STOP HEREdon’t do step two. Undefined terms given there “plain, ordinary and popular” meaning, “such as the average policy holder of ordinary intelligence, as well as the insurer, would attach to it” (at 901) Use the plan and ordinary meaning of defined terms subject to parties’ intention as evidenced from the entire policy If a word has multiple meanings, choose the one that reasonably promotes parties’ intentions Holistic interpretation to achieve commercially reasonable let technical definition/interpretation result in coverage for predictable losses, avoid windfall to insurer or unanticipated recovery to insured Don’t interpret in a way that negates the overall objective of the K Critique: Fictional Terms and conditions are mandated by statute or regulations, e.g. auto, general insurance Ks, accident and sickness, fire coverage Limited scope of timing is really negotiated Commercially sensible interpretation often goes against insured’s interests. Corbould Policy excluded pollution. Underground oil-tank leaked did this fall under the meaning of pollution? HELD: yes, no ambiguity, plain and ordinary meaning of exclusion clause excludes damage by contamination/pollution. Thus, the parties intended to exclude pollution and the parties intentions prevail. Don’t apply reasonable expectations or principles under step two if no ambiguity!! STEP TWO Consolidated Bathurst v. Where the language is ambiguous, in that there are multiple reasonable meanings or i.e. where step one failed to find the answer
191-Thomson-_Law_344-_Final_Long.docx