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Ambiguity of exclusion clauses generally construed against insurer

 
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.
 
 
Although the following passage was cited above when discussing coverage provisions, it is repeated here to emphasize the rule of interpretation of insurance contracts that in the event of ambiguity exclusion clauses are to be interpreted narrowly: 
 
[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).
 
However, part of the justification for construing ambiguity in insurance policies against insurers is that it is normally the insurer who drafted the contract. In other words, in many cases the rule of construing ambiguity against the insurer is simply an application of the contra proferentem rule mentioned in the quote above. However, where the insured drafted the provision in dispute (this rarely occurs) it may be that the contra proferentem rule would actually apply against the insured. Dealing with an all risks policy the court in B.C. Ferry Corp. v. Commonwealth Ins. Co., 1985 CanLII 597 (BCSC) commented in obiter that a provision drafted by an insured may be construed against the insured:
 
The plaintiff also relies on the rule that exclusion clauses in insurance policies which are capable of more than one interpretation ought to be strictly construed against the insurer, and viewed in the manner most favourable to the insured, citing Indemnity Ins. Co. v. Excel Cleaning Service, 1954 CanLII 9 (SCC), [1954] S.C.R. 169, [1954] I.L.R. 1-143, [1954] 2 D.L.R. 721. Counsel for the plaintiff put this argument on the footing that the onus of proof is upon the insurer to show that the loss fails squarely within the exclusion.
 
The defendant disputes this approach. It says the policy language in this case was drafted by the plaintiff's broker and that, if there is any uncertainty or ambiguity as to its meaning, it ought to be construed against the party who proffered the wording, namely, the insured. The plaintiff says the onus of proof is on the insurer to bring the loss within the exception, regardless of who drafted the policy.
 
I think I ought to follow the approach urged by the plaintiff. Although the defendant did not draw the wording of the policy, it approved the wording and agreed to insure the plaintiff on the terms set out in the policy. The terms are that all risks are insured against, unless expressly excluded. It is for the defendant to show that the language of the exclusion applies to the loss in question, and removes it from the all-embracing coverage of an all risks policy. I need not decide, and do not purport to decide, whether such an onus exists in the case of a specified peril policy, which was drafted by an insured. But, an all risks coverage would be most unsatisfactory from a commercial point of view if an ambiguous exclusion were to be construed in favour of the insurer and against the insured. There would be an incentive for the insurer to agree to unclear wording in exclusions and the insured would always be left in doubt as to the ambit of the coverage he had secured. An insurer who seeks to limit his exposure under an all risks policy by excluding losses due to certain specified perils has the onus of specifying the peril clearly, and then of showing that the loss in fact suffered is within the excluding language.
 
(B.C. Ferry Corp. v. Commonwealth Ins. Co., 1985 CanLII 597 at para. 14-16 (BCSC)).