Interpretation of insurance policies

ING Insurance Company of Canada v. Miracle, 2011 ONCA 321, just released on-line, sets out the principles guiding the interpretation of insurance policies. The decision continues the approach long now standard of treating insurance policies more or less as regular contracts for the purposes of interpretation:

[13]         The principles guiding the interpretation of insurance policies were set out by the Supreme Court of Canada in Reid Crowther & Partners Ltd, [1993] 1 S.C.R. 252, at p. 269:

In each ease, the courts must interpret the provisions of the particular policy at issue in light of general principles of interpretation of insurance policies, including, but not limited to:

(1)  the contra proferentum rule;

(2)  the principle that coverage provisions should be construed broadly and exclusion clauses narrowly; and

(3)  the desirability, at least where the policy is ambiguous, of giving effect to the reasonable expectations of the parties.

[14]         The reasonable expectations of the insured and insurer will support a commercially sensible interpretation of the policy.  Estey J. described this approach in Consolidated Bathurst Export Ltd. v. Mutual Boiler & Machinery Insurance Co., [1980] 1 S.C.R. 888, at pp. 901-902:

Even apart from the doctrine of contra proferentum...the normal rules of construction lead a court to search for an interpretation which, from the whole of the contract, would appear to promote or advance the true intent of the parties at the time of entering into the contract. ...[A]n interpretation which defeats the intentions of the parties and their objective in entering into the commercial transaction in the first place should be discarded in favour of an interpretation of the policy which promotes a sensible commercial result.