Page 26 - The Insurance Times November 2024

Exclusion clauses in

Insurance Contract:

Enforceability and

Interpretation Ravi Ranjan Kumar Rana

Associate Vice President
ICICI Lombard General
Insurance Co.

The terms of the insurance contract require strict construction without eschewing or adding the
words in the contract. However, insurers are exempted from any liability where the loss is
attributable to an excluded peril specified in the exclusion clause or not mentioned in the covered
causes/perils/risks/loss.

Abstract

Exclusion clause in any contract plays a very important role in not only the interpretation of contract but also mini-
mizing the risk emanating from the contract. It requires immaculate and impeccable drafting keeping in mind the
laws of different jurisdictions, custom and trade and usage in the particular trade.
Leaving something probable or inevitable will risk the party at the same time excluding everything may invite striking
down the exclusion clause itself being contrary to the main purpose of the contract.
Big concerns have additional responsibility to balance the scale when the other party to the contract is in weaker
position to negotiate or actually has no room to negotiate as in adhesion contract.

The terms of the insurance contract require strict construction without eschewing or adding the words in the con-
tract. Therefore, it is the duty of the insurers to not only accept their liability in clear and unambiguous terms but to
ensure that they are reasonable and not inconsistent with the terms of the main contract.

Exclusion loss is attributable to an excluded peril specified in the ex-
clusion clause or not mentioned in the covered causes/per-
The term 'exclusion' is self-explanatory. It spells out the
ils/risks/loss. Exclusions are construed strictly; therefore, it
things not covered in a contract and requires more atten-
is the duty of the insurers to accept their liability in clear
tion than any other clauses in a contract.
and unambiguous terms. Further, doctrine of 'contra
The terms of the insurance contract require strict construc- proferentem' applies against the drafter of a document
tion without eschewing or adding the words in the contract. which says that ambiguity in the wording of the document
However, insurers are exempted from any liability where the is to be resolved against the party who drafted it, and this

The Insurance Times November 2024 23