Insurance policy wording limits cover…

It may seem self-evident that the wording of an insurance policy is important in establishing the extent of cover but in a recent case an insured discovered that what she thought she had purchased did not cover what she was claiming for.

The insured was set to undergo significant surgery to treat an ongoing heart condition. She lodged a claim for the trauma cover under her insurance policy but was shocked when the insurance provider declined the claim. The insurance provider declined on the basis that the surgery did not meet the specific requirements of the policy.

The insured lodged a complaint with the Insurance and Financial Services Ombudsman Scheme, however, her complaint was dismissed.

She claimed that she had sought cover for everything, but the IFSO case manager decided the claim fell outside the cover provided by the policy. The heart surgery cover only applied if the procedure was open heart surgery to “replace or repair cardiac valves…or to correct any narrowing, dissection or aneurysm of thoracic aorta…or abdominal aorta”.

Unfortunately, the patient’s surgery did not meet this requirement as while she did have open heart surgery, it was not on the valves or aorta. The trauma cover only covered specific defined circumstances which were set out in the terms and conditions of the policy.

Despite the insured seeking cover for “everything”, policies only cover what they say they cover.

If a clause is unusual or onerous (particularly harsh), it cannot be hidden in the terms and conditions, it must be brought to the attention of the insured person so they can read and understand it.

However, the IFSO stressed that specific definitions and restrictions on trauma cover are not unusual or onerous, they are common across the insurance industry. Therefore, the insurance provider was not required to bring them to the patient’s attention at the time she committed to the cover.

Had the patient recognised these specific requirements in the policy she may have been able to seek insurance elsewhere that would have provided cover for the circumstances she ultimately needed.

The takeaway: You must read the terms carefully and if in doubt seek advice on whether the policy offered meets your needs. It is obviously too late to try to arrange other cover after an event.

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