ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.
Every year we deal 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.
This set of case studies illustrates some of the themes that tend to arise most frequently in the complaints referred to us. They include disputes about:
A former soldier, Mr K, complained that his personal accident insurer refused to pay his claim for loss of hearing in both ears.
Mr K said his hearing loss had come about after he was caught up in an intensive bombing campaign during his last two weeks of military service in the Middle East. He sent the insurer a statement from his doctor, confirming that the cause of his disability was ‘exposure to loud noise while on active service’.
The insurer told Mr K it was unable to pay his claim, as the policy only covered injuries that were caused by ‘a sudden act and not by any gradual cause’.
Mr K thought the insurer had ‘interpreted the situation incorrectly’. He said the explosions that had led to his hearing loss were not ‘a gradual cause but a short series of sudden acts with a cumulative effect’.
When the insurer refused to reconsider his claim, Mr K referred his complaint to us.
The policy was not designed to provide benefit for injuries that arose as a result of a gradually-occurring degenerative process or disease. But it was clear from the medical evidence that Mr K’s hearing loss had not been caused by either of these things.
Mr K had been unable to pinpoint any one specific incident (or ‘sudden act’) as the cause of his hearing loss.
However, the evidence showed it had come about as the direct result of a short series of ‘sudden acts’ – a short but defined period of explosions during his last two weeks of active duty. We did not think these circumstances could properly be considered a ‘gradual cause’ of the type the policy excluded.
We said the insurer should pay the claim and that it should also pay Mr K £350 for the distress and inconvenience it had caused him by significant delays in its handling of the claim.
Mr J injured his left knee very seriously while playing cricket with his village team. He made a claim on his personal accident policy and sent the insurer a medical report from the surgeon who had operated on his knee.
This report stated that Mr J was likely to have mobility problems for the rest of his life. The report also noted that the knee injury had ‘resulted in Mr J having to give up work, being now unable to continue with his occupation’.
Before his accident, Mr J had worked full-time as an estate agent. He told the insurer that the injury meant he was ‘unable to continue in work’ as he could ‘no longer get out and about, inspecting properties and showing prospective buyers around’.
The insurer told Mr J it would pay him £10,000. This was the maximum amount payable under the section of the policy that covered ‘permanent total disability, which prevents you from carrying out your usual occupation, and which will probably continue for the rest of your life’.
Mr J complained to the insurer that it had failed to assess his claim correctly. He had expected to receive the substantially larger sum that was payable for policyholders no longer able to work ‘in any occupation whatsoever’. However, the insurer told him his circumstances did not meet the strict criteria set out in the policy for that level of benefit. Mr J then referred his complaint to us.
complaint not upheld
After examining the terms and conditions of the policy, together with the medical evidence that Mr J had submitted, we concluded that the insurer had assessed the claim correctly.
The highest level of benefit was only paid in very specific circumstances, which were set out clearly in the policy. In order to qualify, Mr J would have had to provide evidence that he was unable to work in any occupation whatsoever, for the rest of his life, and that this situation had come about entirely as a result of his injury.
We explained this to Mr J and told him we thought the insurer had assessed his claim in a way that was fair and reasonable. We did not uphold the complaint.
Mr T had an accidental injuries policy that offered cover to policyholders if they suffered an injury that resulted in permanent disability. He complained to his insurer after it turned down his claim for the loss of use of an ankle joint.
The insurer accepted that Mr T had injured his right ankle after a serious fall – and that he had ultimately lost the use of this ankle joint. However, it told him his claim had not met the policy conditions because his disability had not ‘occurred solely and independently of any other cause’.
The medical evidence had shown that, at the time of his fall, Mr T was suffering from ‘asymptomatic arthritis’ in the ankle that was subsequently injured.
Mr T thought the insurer’s decision was unfair. He pointed out that the arthritis was ‘asymptomatic’ (in other words, displaying no symptoms). He said he had been totally unaware that he had arthritis until after the accident, when he had undergone a number of medical tests. And he said he did not see how the arthritis could have affected the outcome of his fall to the extent that he was not entitled to any benefit at all under the policy.
To support his complaint, Mr T arranged an independent medical examination. The resulting report concluded that his accident had been ‘90% responsible’ for his disability.
Mr T sent the report to the insurer but it remained unwilling to reconsider his claim. He therefore referred his complaint to us.
complaint upheld in part
The medical evidence confirmed that Mr T had lost the use of his ankle joint and that – at the time of his accident – the arthritis had been present but he would not have had any reason to be aware of this.
The medical opinion was that, if it had not been for the accident, Mr T’s underlying condition would probably have remained asymptomatic and he would never have needed an operation to replace his ankle joint.
In cases like this, where an accident has caused a disabling injury over and above any degree of disability caused by an underlying condition, it has long been our practice to require the insurer to settle the claim on a proportionate basis.
We upheld the complaint. The independent medical report had said the accident was 90% responsible for Mr T’s disability, so we told the insurer to pay the claim on a proportionate basis of 90%. We said it should also pay interest on this amount.
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.
complaint not upheld
After looking carefully at all the evidence, we 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.
We did not uphold the complaint. We told Mr D that, in the circumstances, the insurer had been right to reject the claim entirely, as it did not meet the terms and conditions of the policy.
Mrs E referred her complaint to us after her insurer turned down the claim for permanent disability that she had made under her personal accident policy.
She had become permanently disabled after suffering a stroke during childbirth. The insurer told her that her disability was not covered because it had not been caused by an ‘accident’. The policy defined ‘accident’ as ‘a sudden and unforeseen event’.
The insurer said that her stroke was the result of a rare complication of pregnancy – and pregnancy was not ‘a sudden and unforeseen event’.
After looking at all the evidence we concluded that the insurer had not acted reasonably in refusing to pay the claim.
We pointed out to the insurer that although childbirth itself is not a ‘sudden and unforeseen event’, the stroke that had led to Mrs E’s disability resulted from a rare and totally unexpected complication of childbirth.
The cause of Mrs E’s disability did, therefore, meet the policy definition of ‘accident’ as a ‘sudden and unforeseen event’. And as the policy did not exclude complications of childbirth, we said the insurer should pay the claim.
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’.
Mr A then referred his complaint to us.
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 we 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. We upheld the complaint and told the insurer to pay the claim.
At the time we were considering this case, we were unable to require businesses to pay any amounts over £100,000 (this has now increased to £150,000 for complaints received since 1 January 2012).
The total sum payable in this claim was more than the £100,000 maximum compensation that applied at that time. However, the insurer confirmed that it would pay Mr A the full amount to which he was entitled. It said the dispute had never been about how much it should pay, only about whether it was liable to pay the claim at all.