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M. CLARKE
The construction of insurance contracts
Malcolm Clarke,
Professor Emeritus of Commercial Contract Law, University of Cambridge
1. Introduction
As one, aged 9, who tried but failed to learn ancient Greek and who had the same
lack of success with Latin a couple of years later, I understand both the difficulty of
language and also its importance: coherent communication in context. We do not
have any ancient Greeks or Romans to talk to but in both Athens and London today
the importance of communication is appreciated For the insurance community too,
communication is important and that starts with the insurance policy because, as
has been affirmed in the USA “the policy is the law between the parties”
1
, some-
thing that might equally have been said in France
2
, or in England
3
.
In England the importance of the policy and its construction was recognised as long
back as 1803, and the rule affirmed that “same rule of construction which applies to
all other instruments applies equally to this instrument of a policy of insurance,
viz
,
that it is to be construed according to its sense and meaning, as collected from the
terms used in it, which terms are themselves to be understood in their plain, ordi-
nary and popular sense”
4
.
What is plain and popular in London may not be so in Athens or further east. Hence,
as was pointed out in the High Court of Australia, insurance “is commonly offered
on standard form policies which have a national or international provenance.
Courts recognise that fact and the consequence that risks may be assessed, and re-
insurance procured, on the footing that settled interpretations of commonly used
language will not be disturbed without good reason”
5
.
1.
Hooper
v
State Farm
, 782 So 2d 1029, 1032 (La App 5 Cir, 2001). This important common starting point
is shared with the USA but beyond that there is neither a common language or a common law:
Re
Hooley Hill Rubber & Chemical Co Ltd and Royal Ins Co
[1920] 1 KB 257, 272 (CA).
2. Code. Civ. Art. 1134.
3.
Clarke
, The Law of Insurance Contracts, 15-1. Generally, on the rules of construction in England, see K
Lewison,
The Interpretation of Contracts
(5th ed, 2011).
4.
Robertson v French
(1803) 4 East 130, 135.
5. Johnson v American Home Assurance Co [1998] HCA 14, [19].