In Orders 11092 of 10 June 2020 and 14595 of 9 July 2020, the Supreme Court (Third Division) reiterated certain principles that should be used as guidance for interpreting insurance clauses with a view to ensuring a fair balance between the insured's rights and the insurer's obligations.

In line with the rules on the interpretation of contracts set out in the Civil Code, the Supreme Court reiterated that:

  • in case of doubt, coverage exclusions that significantly restrict the scope of the insured risk must be interpreted in favour of the insured; and
  • the amount of the premium and the scope of the coverage granted must be consistent. To this end, judges should assess on a case-by-case basis whether an insurance contract meets the insured's needs and offers effective coverage in the event of a claim.

In particular, when interpreting insurance clauses, the courts must:

  • consider the literal meaning of the words and expressions used;
  • review the contract as a whole:

the individual clauses must be considered in correlation with each other... since the literal meaning of the words must be understood as the entire literal formulation of the negotiating declaration... the judge must link and compare phrases and words in order to clarify their meaning (Order 11092/2020);

  • check that the meaning of a clause is consistent with the interests that the parties specifically intended to protect; and
  • apply the principles of good faith and fairness and ensure that the clause does not generate false expectations.

In such a context and in light of the product oversight governance rules and IVASS's letter to the market of 18 March 2018 regarding clear and simple contracts, the following will be useful in reconstructing the parties' intention and the scope of the insuring grant:

  • the analysis of the proposal questionnaires completed by the insured;
  • the pre-contract information provided prior to the policy inception; and
  • the way in which the policy is structured and written.

The Supreme Court orders once again confirm the importance of insurance contracts being drafted with rigor and according to clear and simple criteria in order to limit misinterpretation and possible litigation.