Simon's Legal Resources

Insurance - Interpretation (4)

. Trebell v. Canada Life Assurance Company

In Trebell v. Canada Life Assurance Company (Ont CA, 2026) the Ontario Court of Appeal allowed an insurer's appeal, here where "the motion judge granted Mr. Trebell summary judgment against Canada Life for the full amount of the Policy, plus interest, after concluding that “s. 180(1)(c) does not permit Canada Life to reach back into [Ms. Trebell’s] medical records” and raise insurability issues beyond a two-year period specified in s. 184(2) of the Act.".

Here the court identifies several insurance contract interpretation principles, mostly relating to ambiguity:

[84] The material principles applicable to the interpretation of a contract of insurance that I must consider can be simply stated:

. If the language of an insurance contract is unambiguous, “effect should be given to that clear language, reading the contract as a whole”: Emond v. Trillium Mutual Insurance Co., 2026 SCC 3, 509 D.L.R. (4th) 583, at para. 37. In this case, the whole of the contract consists of the application and the policy: Insurance Act, s. 174(2).

. In identifying the clear language of the policy, the “ordinary and grammatical meaning” of the words used in the material clause, read in the context of the entire contract, must be interpreted “as they would be understood by the average person applying for insurance, and not as they might be perceived by persons versed in the niceties of insurance law”: Emond, at para. 38.

. Things are more complex if the language of the insurance contract is ambiguous, which will be the case “where there are ‘multiple reasonable but differing interpretations of the policy’” that are not resolved by the definitions in the contract: Emond, at para. 41, citing Sabean v. Portage La Prairie Mutual Insurance Co., 2017 SCC 7, [2017] 1 S.C.R. 121, at para. 42. Where this occurs, the meaning that is more reasonable in promoting the intention of the parties is to be selected: MacDonald v. Chicago Title Insurance Co. of Canada, 2015 ONCA 842, 127 O.R. (3d) 663, at para. 66, leave to appeal refused, [2016] S.C.C.A. No. 39. If considerations such as the reasonable expectations of the parties, commercial reasonableness, and consideration of similar insurance policies do not identify the interpretation that more reasonably promotes the intention of the parties, “the court must have resort to the contra proferentem rule … which provides that the ambiguity must be resolved in a manner favourable to the insured”: Emond, at paras. 48-50.

. Varriano v. Allstate Insurance Company of Canada

In Varriano v. Allstate Insurance Company of Canada (Ont CA, 2023) the Court of Appeal held that a SABS provision that required notice was not also a 'coverage' provision, and thus not subject to a broad interpretation, as opposed to a narrow interpretation to which exclusions or restrictions are subject:

B. The Divisional Court Erred in Construing s. 37(4) as an Insurance Coverage Provision

[35] The Divisional Court held that its interpretation of s. 37(4) is consistent with the general principle that “insurance coverage provisions are to be interpreted broadly, while coverage exclusions or restrictions are to be construed narrowly, in favour of the insured”.

[36] While I do not quarrel with this statement, the provision in question is not a coverage provision – s. 37(4) does not in anyway determine whether a person is entitled to coverage under the SABS. The only issue to be determined was whether that notice provision had been complied with. The correct interpretation of s. 37(4) requires an interpretation that accords with the purposes of the SABS, that is the timely submission and resolution of claims (Sietzema, at para. 16) and the purpose of the provision itself, which is to permit the insured to decide whether or not to challenge the denial of benefits (Turner, at para. 8). Respectfully, the Divisional Court’s interpretation of this notice provision did not accord with those principles.

[37] Because I have found that the notice was not deficient and complied with the legislative requirements of s. 37(4) of the SABS, it is not necessary to address either Allstate’s alternative argument that even if the notice was deficient in failing to provide a medical reason, it had triggered the limitation period by clearly and unequivocally terminating Mr. Varriano’s IRBs, nor Mr. Varriano’s rejoinder that the termination left his eligibility for future benefits under s. 11 unclear.

. Cronos Group Inc. v. Assicurazioni Generali S.p.A.

In Cronos Group Inc. v. Assicurazioni Generali S.p.A. (Ont CA, 2022) the Court of Appeal considered an issue of insurance contract interpretation:

[44] With respect to the fourth matter, Generali had submitted that the absence of an explicit payment term for an Excess Policy OEP option created an ambiguity that supported the exclusion of an OEP option. The application judge assessed that submission in light of the principle that contracts of insurance are to be interpreted to give effect to their terms and in a commercially reasonable manner. She found support for such an approach in the decision in Re Canada 3000 Inc. (2002), 2002 CanLII 49602 (ON SC), 35 C.B.R. (4th) 37 (Ont. S.C.). ...

. EPCOR Electricity Distribution Ontario Inc. v. Municipal Electric Association Reciprocal Insurance Exchange

In EPCOR Electricity Distribution Ontario Inc. v. Municipal Electric Association Reciprocal Insurance Exchange (Ont CA, 2022) the Court of Appeal considered basic contract interpretation principles:

(b) Principles of interpretation

[56] The principles of interpretation applicable to insurance policies are not in dispute and can be briefly summarized.

[57] The first principle is that when the language of the policy is unambiguous, the court should give effect to the clear language, reading the insurance contract as a whole: Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, [2010] 2 S.C.R. 245, at para. 22, referring to Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551, at para. 71.

[58] The instruction that the contract must be read as a whole is frequently expressed but equally frequently ignored by both insurers and insureds as they focus on the coverage or exclusion at issue. Insurance policies, like the one at issue in this appeal, often contain multiple, sometimes overlapping coverages, exclusions, conditions, and endorsements. Reading the policy as a whole informs the exercise of ascertaining the intention of the parties. Reading the policy as a whole, and searching for harmony rather than discord, is often helpful in reconciling apparent ambiguities or inconsistencies.

[59] Where the language of the policy is ambiguous – where the meaning is not clear, and there are competing reasonable interpretations – the general rules of contract interpretation come into play. Courts can give preference to an interpretation that is consistent with the reasonable expectations of the parties, as long as that interpretation is supported by the language of the policy: Progressive Homes, at para. 23. Courts should avoid an interpretation that would give an unrealistic result or that would not have been in the contemplation of the parties when the contract was made: Progressive Homes, at para. 23; Ledcor, at para. 78.

[60] When these rules of construction fail to resolve the ambiguity, the court will construe the policy contra proferentem, against the insurer. This gives rise to the principle that coverage provisions are to be interpreted broadly and exclusions are to be construed narrowly: Progressive Homes, at para. 24; Scalera, at para. 70.