Should Coverage Provisions Be Construed Broadly And Exclusion Clauses Narrowly?

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Research Essay
Question 1 – Should coverage provisions be construed broadly and exclusion clauses narrowly? If so, why? If not, why not?
One of the principal grounds for rejecting insurance claims is that the claim is not covered by the terms of the policy, or is specifically excluded. It has been common practice that coverage provisions should be interpreted broadly and exclusion clauses should be interpreted narrowly. This cannon of construction is derived from the Contra Proferentum rule which applies in the event of ambiguity. The construction of exclusion clauses and coverage provisions helps justify the objective intention of the contract. This is the intention which the court considers, a reasonable person in the position of the contracting parties, would have had. It is submitted that coverage provisions should be broad and encompassing and exclusion clauses should be narrow. However, before such a conclusion is reached, this paper will aim to justify the reasoning behind such a claim analysing arguments for and against such a proposition, drawing upon the landmark case Darlington Futures Ltd v Delco Australia Pty Ltd to help relate the discussion to issues raised by such considerations.
In the hope of reviving the debate of whether coverage provisions should be constructed broadly and exclusion provisions narrowly in the formation of an insurance contract, the main premise of this paper critically analyses arguments for and against
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