Insurer avoids income protection cover…

The Insurance & Financial Services Ombudsman has rejected a complaint from an insured over his income protection cover.  The insured had insurance for a total disability benefit from his farming occupation.  He had suffered an injury in 2009 and again in 2012 but did not notify his insurer at those times and was not assessed for total disability.  In 2013 he sold his share-milking herd and cut back on his farming activities, but did not obtain a medical certificate that he was totally disabled.

Unfortunately, his insurance cover had a provision that should he cease farming for more than three consecutive months, for any reason other than being totally disabled the policy would lapse.  Although the insured did carry on some farming activities there was a period of six months when he could not show any farming activities because of the injury he suffered.

This meant that he had ceased farming for more than three consecutive months and the policy lapsed.  As there was no assessment at the time that he was totally disabled he was not able to make a claim on his policy, even though he was now regarded as being totally disabled from his injuries.

The Insurance Ombudsman’s Office considered that it was bound to reach the conclusion it did on the policy wording, despite the fact that the insured did not realise the consequences of not notifying the insurer of his earlier injuries and not obtaining medical advice at the time, so that he could be assessed for total disablement.

The insurer which had been collecting the premiums for all of the years following the injuries was able to avoid liability and merely repaid the premiums paid because of the lapse the of policy.

If you have an insurance policy it pays to carefully read all of the terms to ensure you meet all of the conditions at the relevant times and get the required medical evidence to make a claim without delay.

Alan Knowsley
Insurance Lawyer Wellington