Complaints involving personal accident insurance

Every year the Financial Ombudsman Service deals with a relatively small but steady number of complaints involving personal accident insurance. Policies of this type generally offer a defined level of benefit where a policyholder dies or suffers serious injury as a result of an accident.

Most disputes between insurer and customer concern:

  • Whether or not the policy covers a specific injury, or the circumstances in which it was sustained
  • Whether an accident was the sole cause of an injury or whether a pre-existing condition contributed to the problem
  • The level of benefit payable

Case study

Insurer refuses to pay personal accident claim because of an underlying medical condition

Mr D made a claim under his personal accident policy for total and permanent loss of use of his left leg. He said his disability had come about as a result of a fall, when he had slipped on some water on his bathroom floor.

After examining the medical evidence, including a statement from Mr D’s GP that functional loss of use of the left foot is effectively 100%, the insurer offered to pay Mr D for total and permanent loss of use of one foot.

Mr D thought he should have been offered the significantly larger sum that was payable for the loss of an entire leg. He therefore rejected the insurer’s offer and complained that it had failed to assess his claim correctly.

The insurer then paid for an independent medical report. The specialist who examined Mr D and produced this report concluded that Mr D’s fall had not caused any significant new injury to his left foot.

The specialist noted that this foot had been badly injured some years earlier and that Mr D’s use of the foot had continued to be limited ever since, even though he had undergone a considerable amount of treatment.

The specialist conceded that Mr D’s fall might have aggravated the existing problem. However, he said that if this had happened, any effects attributable solely to the fall would only have lasted a few weeks.

The insurer then told Mr D it was rejecting his claim altogether, on the grounds that there was a ‘pre-accident history of injury’ to his left foot. Unhappy with this, Mr D brought his complaint to us.

The complaint was not upheld as after looking carefully at all the evidence, the ombudsman concluded that the accident had not caused the problem for which Mr D was claiming on his policy.There was clear, independent medical evidence showing that Mr D had a significant history of treatment to his left foot – and that this treatment pre-dated both the events relating to his claim and the start date of his policy.

Case study 

Dispute over whether consumer’s injury happened accidentally as required by policy terms

Mr A had insurance cover under his employer’s group policy for, among other things, accidental bodily injury. He put in a claim under this section of the policy for paraplegia (paralysis of the lower part of the body).

He said the accident giving rise to his disability had occurred while he was playing football with his local amateur team. He had been perfectly fit and well at the start of the match. However, during the match he had suddenly become aware of acute pain between his shoulder blades. He had subsequently been admitted to hospital and was eventually diagnosed with paraplegia.

The insurer turned down Mr A’s claim. It said the medical report provided by Mr A’s doctor stated that there was no evidence that the disability had been caused by any accidental bodily injury either during the football match or otherwise. The medical report said that the paralysis had resulted from a ‘previously existing but undetected congenital abnormality’ (in other words, something that had been present when he was born).

Mr A complained that the insurer had treated him unfairly. He said he did not see how it could be considered anything but an accident that he had started a game of football in perfect health and become paralysed for life by the end of it.

In response, the insurer told him that the policy defined accidental bodily injury as an injury to the body caused by a sudden act and not by any gradual cause or degenerative process.

The insurer said that the intentional movements he would have made while playing football could not reasonably be said to ‘constitute or cause accidental bodily injuries as defined in the policy.

The complaint was upheld against the insurer.The terms and conditions of many personal accident policies state that, for benefit to be paid, the accidental bodily injury needs to have come about as a result of something that was not only a sudden, unexpected and chance event, but that was also external, violent and visible.However, Mr A’s policy required only that the accidental bodily injury was caused by a sudden event.There had been no accident in the ordinary, everyday sense (he had not tripped, slipped etc). But there was no dispute about the fact that – before the football game – Mr A had been fit and well. He had not been in any pain or discomfort and had been quite unaware of the congenital abnormality that was subsequently discovered.

The paralysis had come about after a sudden event during the game. So the ombudsman concluded that Mr A had suffered an accidental bodily injury, as defined by the policy, and he therefore had a valid claim for paraplegia benefit under the policy. The insurer had to pay the claimof over £100,000.

If the insurer had been less slipshod  and vague in the policy wording, it would not have had to pay.

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Complaints involving personal accident insurance
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