Beware the bold: interpreting defined terms in insurance contract

Contractual interpretation – insurance contracts – defined terms – bolded terms defined to have special meaning – where term appears unbolded, it is to be interpreted in accordance with natural and ordinary meaning In the recent decision of Cruise Oz Pty Ltd v AAI Ltd,1Justice Carmody of the Supreme Court of Queensland considered whether an insurance agreement covered flood damage sustained at a trade show. In resolving this dispute, His Honour considered:

1. whether showgrounds constitute "your premises" for the purposes of the exclusion clause under section 3 of the agreement; and
2. the process for determining the "most favourable clause" where a "Two Section Exclusion Clause" in the agreement prescribed that, where two or more insuring clauses might respond to the relevant claim, the most favourable clause will apply.