Houghton v Trafalgar Insurance Co. Ltd [1954] 1 QB 247
Interpretation of ambiguous terms in insurance contracts, interpretation contra proferentem
Facts
The claimant and the defendant had entered into an insurance contract (with the defendant being the insurer). The contract included an exemption clause, which stipulated that the Defendant was not liable to pay out where the claimant’s vehicle had an excess load at the time of an accident. The specific wording of the exemption clause was that coverage was excluded for “loss, damage and or liability caused or arising whilst the car is conveying any load in excess of that for which it was constructed”. The Claimant suffered a car accident and attempted to claim on his policy. At the time of the accident there were 6 people in the vehicle. The vehicle was designed to seat only 5.
Issues
The issue in the case was the meaning of the word “load” in the exclusion clause and if it could apply to carrying too many passengers.
Decision/Outcome
It was held that the meaning was ambiguous and that in such cases the meaning would be interpreted in the interests of the insured, in other words – contra proferentem.
“If there is any ambiguity, it is the company’s clause and the ambiguity would be resolved in favour of the assured” (Somervell LJ)
Therefore, it was held that the word load did not apply to passengers and that the Defendant could not avoid paying out on the policy. The court grounded its approach in a reluctance to allow the application of (and arguably proliferation of) exclusion clauses, which seek to exclude liability in a vague and far reaching manner.
Updated 19 March 2026
This article accurately describes the decision in Houghton v Trafalgar Insurance Co Ltd [1954] 1 QB 247 and the contra proferentem rule as it applied to ambiguous exclusion clauses in insurance contracts at that time.
Readers should be aware of two significant developments that affect the broader legal context in which this principle now operates. First, the Consumer Rights Act 2015 (replacing the relevant provisions of the Unfair Terms in Consumer Contracts Regulations 1999) now provides statutory protection for consumers against unfair contract terms, and under section 69 of that Act the contra proferentem rule is effectively codified for consumer contracts: where a term could have different meanings, the interpretation most favourable to the consumer prevails. Second, in business-to-business insurance contracts, the Insurance Act 2015 introduced substantial reforms to the law of insurance, particularly regarding disclosure and warranties, though it did not abolish the contra proferentem principle. The FCA’s Insurance Conduct of Business Sourcebook (ICOBS) also imposes requirements on insurers regarding the clarity of policy terms.
The case itself remains a valid and frequently cited authority for the contra proferentem rule in contract law, but students should understand it within this updated statutory framework rather than treating the common law position as the whole picture.
