If a phrase in ARPI can have two or more sensible meanings, then the application of the rule known as “contra proferentem” will result in the phrase being construed in favour of the insured and therefore against the underwriter, provided that he had drafted the policy. For example, the policy may refer to “stock” in the description of personal property. It will not be clear from that description as to whether it means stock in process or completed stock, i.e. finished goods. Unless the underwriter could persuade the court to accept expert evidence, to express a contrary view, the court will probably give the phrase its widest definition so that it would favour the assured, so that it will include stock in process and finished goods.

The rule does not always work against the insurer. ARPI is often a commercial contract negotiated between two corporations of equal bargaining powers. Indeed, particularly in the Lloyd’s market, the policy may be drafted by the broker who is usually the agent of the assured. In those circumstances, the rule may be neutralised or, on occasions, may work in favour of the insurer. This may be changing, however, as the implementation of the Lloyd’s business plan by the Lloyd’s Policy Signing Office (LPSO) who are playing a very different role. The plan anticipates that 70 per cent of all policies issued by the LPSO will be standard forms drafted by it and in those circumstances the “contra proferentem” rule may work against Lloyd’s underwriters.