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Brand, Oliver --- "Contract Terms: Judicial Approaches to the Interpretation of Insurance Contracts" [2012] ELECD 159; in Burling, Julian; Lazarus, Kevin (eds), "Research Handbook on International Insurance Law and Regulation" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on International Insurance Law and Regulation

Editor(s): Burling, Julian; Lazarus, Kevin

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849807883

Section: Chapter 5

Section Title: Contract Terms: Judicial Approaches to the Interpretation of Insurance Contracts

Author(s): Brand, Oliver

Number of pages: 27

Extract:

5 Contract terms: judicial approaches to the
interpretation of insurance contracts
Oliver Brand



1. INTRODUCTION

In his learned treatise on Insurance Law in Ireland Buckley informs us about the lament of
a fourteenth-century Tuscan cloth merchant who did not receive (full) coverage for the
loss of a galley at sea from his insurer: `When they insure it is sweet to them to take the
monies but when disaster comes it is otherwise and each man ... strives not to pay'.1 Time
did not prove to be a good healer. Today, insurers still labour under the notorious
reputation of interpreting contract terms in an unduly narrow fashion and of hiding
behind small print in order to avoid payment to the policyholder. If this is true, the
problem is compounded by the fact that insurance contracts are often `contracts of
adhesion', that is, agreements in which one of the parties ­ the policyholder ­ has no
option other than to adhere to the terms dictated by the other party ­ the insurer ­ or
reject the conclusion of the contract.2 In particular, where the policyholder is a consumer,
legal systems feel obliged to account for his or her inability to negotiate terms and the
corresponding risks of being exploited.
The extent and manner of intervention affecting the terms of insurance contracts varies
remarkably from country to country. In general, intervention may take one of three
different forms.3 Either the legislature may create binding rules of law that override the
conflicting terms of contracts ...