“The Common Law rule of construction “verba chartarum fortius accipiuntur contra proferentem” means that ambiguity in the wording of a policy is to be resolved against the party who prepared it.
MacGillivray on Insurance Law [9th ed., 1997] deals with the rule of Contra Proferentem as follows:
“The Contra Proferentem rule of construction arises only where there is a wording employed by those drafting the clause which leaves the Court unable to decide by ordinary principles of interpretation which of two meanings is the right one. One must not use the rule to create the ambiguity – one must find the ambiguity first. The words should receive their ordinary and natural meaning unless that is displaced by a real ambiguity either appearing on the face of the policy or, possibly, by extrinsic evidence of surrounding circumstances.”
Colinvaux’s Law of Insurance [6th ed., 1990] propounds the Contra Proferentem rule as under:
“Quite apart from contradictory clauses in policies, ambiguities are common in them and it is often very uncertain what the parties to them mean. In such cases the rule is that the policy, being drafted in language chosen by the insurers, must be taken most strongly against them. It is construed Contra Proferentem, against those who offer it. In a doubtful case the turn of the scale ought to be given against the speaker, because he has not clearly and fully expressed himself. Nothing is easier than for the insurers to express themselves in plain terms. The assured cannot put his own meaning upon a policy, but, where it is ambiguous, it is to be construed in the sense in which he might reasonably have understood it. If the insurers wish to escape liability under given circumstances, they must use words admitting of no possible doubt. But a clause is only to be Contra Proferentem in cases of real ambiguity. One must not use the rule to create an ambiguity. One must find the ambiguity first. Even where a clause by itself is ambiguous, if, by looking at the whole policy, its meaning becomes clear, there is no room for the application of the doctrine. So also where if one meaning is given to a clause, the rest of the policy becomes clear, the policy should be construed accordingly.”
A standard policy of insurance is different from other contracts and in a claim under a standard policy the rule of Contra Proferentem is to be applied. The policy in this case is in a standard form. But we see no ambiguity in the relevant clause of the policy and the rule of Contra Proferentem is not applicable.”
– Hon’ble Justice L. Nageswara Rao, Industrial Promotion & Investment Corporation of Orissa Ltd. v. New India Assurance Company Ltd., [Civil Appeal No. 1130 of 2007].