Caneast Foods Limited v. Lombard General Insurance Company of Canada, 2008 ONCA 368 (released today) sets out the proper principles of interpreting an insurance contract. The Court summarized these principles as follows:
The insurance policy is a contract. The ordinary rules applicable to the interpretation of contracts apply. The wording of the insurance contract must be given its plain and ordinary meaning. The insurer has received consideration for the coverage of stipulated risks. The promised coverage creates reasonable expectations on the part of the insured. If a loss falls within the ambit of the risks covered, the insurer must indemnify the insured for its loss, subject to the application of any exclusion clause. Coverage clauses should be construed broadly and exclusion clauses, narrowly. Since insurance policies are essentially adhesionary, the standard practice is to construe ambiguities against the insurer.
James Morton
Steinberg Morton Hope &
M2N 6P4
416 225 2777
Blog: http://jmortonmusings.blogspot.com/
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