Run-Up to Renewals: Surplusage

The “pick and mix” approach to drafting – how the English courts are dealing with surplusage.

Does your contract have words that add nothing at all? And does that matter?

In an ideal world, every word in a (re)insurance contract will have a specific, clear meaning and there will be no repetition or words which seemingly add nothing at all.

But that is not how things always work in real life and the English courts have recognised (in judgments in the last couple of years) that (re)insurance policies are often drafted in a “pick and mix” way and (particularly when renewals come around) clauses are carried across wholesale from other policies/standard form wordings, without thought necessarily being given as to how that might affect clauses already in the contract.

If a dispute arises about the meaning of a term, an argument might be run that a word must mean something different from the same word used elsewhere in the same contract, otherwise it will be “mere surplusage”. Alternatively, it might be argued that the same word used in different parts of a contract must always have the same meaning. Recent English court cases have examined both arguments.

The Courts’ approach to consistency in policy wordings

The Master of the Rolls, Sir Geoffrey Vos, recognised in Bellini N/E Ltd v Brit UW Ltd [2024] EWCA Civ 435 that “Insurance policies are… often somewhat repetitive. They are also sometimes clumsily drafted. Without giving evidence, I think it is fair to say that this can arise, even if it did not in this case, from the "pick and mix" approach to the insertion of various possible clauses that insurers sometimes adopt”.

 In International Entertainment Holdings v Allianz [2024] EWCA Civ 1281, Males LJ quoted that passage to explain why there is no inference, when interpreting insurance policies, that terms have been used consistently across different clauses: “there is an obvious danger in trying to find coherence between clauses which have been stitched together with no attempt to ensure such coherence”.

This approach was adopted more recently by the judge in WRBC v AXA XL & Ors  [2026] EWHC 939 (Comm) (23 April 2026) and so, although the term “one event” had been defined in one part of the relevant treaties, that did not mean that that definition must apply where the same term was used elsewhere.

Superfluous words

It was also recognised in WRBC that sometimes words are used in a contract even though they are redundant or superfluous. Arguments based on redundancy or surplusage are not sure-fire winners, especially in an insurance context.

In another case this year, CP Holdings Ltd & Ors v Assicurazioni Generali SpA & Ors  [2026] EWHC 1717 (Comm) (07 July 2026) the judge referred to the “so-called presumption against surplusage” when interpreting a general clause which stated that there would be no increase in policy limits in a situation where that could never have arisen anyway. The argument was run that that interpretation must be wrong because the clause would not have been included if it added nothing at all.

 The judge said that an argument about surplusage “carries no real weight when applied to a bit of familiar insurance language in one of the General Conditions on page 57 of an 85-page policy, as part of considering the meaning and effect of the policy Schedule set out 50 pages earlier”. It was said that no reasonable policyholder would think that the insurer had identified a situation where limits could be increased and so sought to counteract that situation by including the general clause wording in another part of the policy.

Comment

So, if the same words used in different clauses in a policy do not have to be interpreted as meaning the same thing or as meaning something entirely different, where does that leave us?

We come back to the position set out by the Supreme Court in The Financial Conduct Authority & Ors v Arch Insurance  [2021] UKSC 1 (15 January 2021) where it was said that a policy should be interpreted from the viewpoint of “an ordinary policyholder who, on entering into the contract, is taken to have read through the policy conscientiously in order to understand what cover they were getting” and not a pedantic lawyer.  There may be some nuance to this proposition in a reinsurance context, given the sophistication of the parties.

In any case, the English courts will try to construe contracts in accordance with good business sense and by considering the commercial object or purpose of the policy. All of which can make it difficult to predict, and which is why it is a good idea to try to ascertain where clauses and defined terms potentially interact when new wording is introduced and to avoid, as far as possible, a ‘pick and mix’ approach which could have unintended consequences. That may be difficult to avoid at times, where additional cover is tagged onto a standard policy and a selection is made from a library of clauses. In that situation, legal help should be sought to review the changes and ensure that conformity and certainty are achieved.