Personal accident insurance is provided in two ways:
Most personal accident policies pay lump-sum benefits when the policy terms are met. These usually require the consumer to suffer death or bodily injury, that arises from an accident or unforeseen event. The consumer’s claim must not fall within an exclusion clause. And policies usually state that the consumer is not covered if the death or bodily injury is caused by “sickness, disease or any naturally occurring condition or process”.
Standard areas of cover are:
But some policies additionally cover permanent partial disablement, temporary total disablement and/or temporary partial disablement.
Personal accident policies vary in terms of levels of benefit, the definition of key terms, areas of cover and exclusions. This note assumes that some typical combinations of policy conditions are included, but different outcomes may be appropriate where policy terms vary.
Because personal accident policies offer protection only against accidental death and bodily injury, consumers should carefully consider what type of protection is best suited to them. If the consumer wants protection for sickness or general disability, other forms of insurance may be more appropriate. If the consumer is being advised, the adviser should also take these considerations into account.
Complaints that consumers refer to us most frequently are that the financial business refused to pay the claim by wrongly deciding that:
We also commonly see complaints from consumers that:
This is a requirement of the cover – but sometimes the word “accident” is not even used in the policy. Instead, the consumer may be required to suffer death or bodily injury as “the direct result of an accidental, external, violent and visible cause”, or words to that effect.
what does "accidental" mean?
If there is no definition of "accidental" in the policy, we generally apply the normal meaning of the word: an unforeseen or unexpected and unfortunate occurrence. It can either be the cause or the result that is unexpected, but at least one of them must be this.
what is an "external, violent and visible cause"?
We will look at the particular circumstances of the event in the light of the common interpretation of the policy wording. In many cases this will be straightforward: a car accident, for example, will be external, violent and visible whereas a heart attack may be violent and visible but not external.
However, events are not always so straightforward and, in particular, linking the death or bodily injury to a particular cause may be problematic. For example, was the heart attack the cause of the car accident? Or was the car accident the cause of the heart attack? Or in fact, was the consumer the victim of two unrelated events?
Consideration of these cases will typically involve establishing the actual sequence of events that led up to the death. There may also be difficult questions of "causation" – if the heart attack did happen before the accident, was it the accident that killed the consumer, or would they have died anyway because of the heart attack?
is the death or bodily injury "accidental" if it occurred in relation to surgery?
Claims made because a consumer died or suffered a bodily injury following surgery are often turned down by financial businesses on one or both of two grounds:
Again we adopt a common sense approach. All surgery involves some risk. Generally we try to distinguish between cases where the risks were explained to the consumer and they were simply unlucky – and those where something unexpected, unplanned or negligent happened before, during or after the surgery.
Most personal accident policies require the death or bodily injury claimed for to have resulted solely and directly from an “accidental cause” – and state that the consumer is not covered if the death or bodily injury is caused by “sickness, disease or any naturally occurring condition or process”.
This means that financial businesses turn down claims on several grounds:
Financial businesses usually refer to medical reports/records, the death certificate and/or the coroner’s report when turning down claims for these reasons.
what if there were factors other than the accident?
Our approach will be shaped by the circumstances of the case – in particular, the degree to which the accident contributed to the death or bodily injury that is claimed for.
For example, a consumer might suffer with arthritis which would have caused permanent total disablement within ten years. They then had an accident which brought forward the effects, to the extent they immediately became permanently and totally disabled.
Some policies do allow for proportionate payments in these circumstances. But even when they don’t, depending on the circumstances, we may tell the financial business to pay the claim on a proportionate basis (see below).
Similarly, if an accident worsened an existing disability, depending on the circumstances, we may decide that the consumer is entitled to some benefit. In these cases, we will usually require clear evidence that the accident did increase the consumer’s level of disability. We generally do not tell the financial business to pay the full amount of benefit in cases like these – instead, we may tell it to pay a proportion of the benefit (see below).
The main exclusions usually included in personal accident policies are that the consumer’s claim will fail if:
The wording and effect of these exclusions will vary between policies so we will always carefully examine the wording of the policy.
Many policies will also exclude claims for death or bodily injury resulting from activities such as driving a vehicle with fewer than four wheels, diving, mountaineering, rock or cliff climbing, pot-holing, parachuting, professional sports, boxing, racing and flying when not a fare-paying passenger.
Exclusions for various categories of war and invasion will also generally apply, as will exclusions for claims arising as a result of duties in the armed forces (although specialist forces personnel policies are available).
In each case, it is up to the financial business to prove on the balance of probabilities that the exclusion applies.
the alcohol and/or drugs exclusion clause
Most personal accident policies contain an exclusion clause so that if the death or bodily injury is caused by alcohol and/or drugs, benefit is not payable. Again, policy wordings differ and we will always check to see what the policy actually excludes.
There is an important difference between an accident occurring after someone has consumed alcohol and/or drugs, and an accident being caused by alcohol and/or drugs.
We will expect the financial business to show that it is more likely than not that the consumption of alcohol and/or drugs caused the accident (or failure to escape its consequences).
We will also look at:
If, for example, the consumer was run over because they were lying down in the road while drunk, it may be that death or bodily injury could reasonably have been anticipated as a result of the action.
If, on the other hand, the consumer was hit by a speeding car while crossing the road when drunk, we are less likely to decide that they anticipated, or could reasonably have anticipated, that death or bodily injury would occur. The accident probably would have happened whether or not the consumer was under the influence of alcohol – and so it is unlikely that the exclusion clause would apply.
the deliberate self-inflicted injury/reckless exposure to danger-exclusion clause
Some personal accident policies contain an exclusion clause, so that if the death or bodily injury resulted from a deliberate self-inflicted injury or reckless exposure to danger, benefit is not payable. Some policies instead refer to “needless exposure to peril” or “exposure to exceptional danger”.
The main issue that arises in these cases is at what point an action becomes a “reckless exposure to danger”. We will carefully consider the policy terms, examine the circumstances of the case and take a common sense approach in reaching our conclusion.
For example, some might consider cycling without a helmet a “reckless exposure to danger”, but it is a part of ordinary life. In contrast, to argue that base-jumping is not “reckless exposure to danger” would be difficult. But many of the cases that we see are less clear cut. For example, is quad biking a “reckless exposure to danger” and does it matter if the consumer was wearing a helmet or was on private land?
the suicide exclusion clause
Where the financial business turns down a claim because it believes that the consumer committed suicide, we will decide the case on the balance of probabilities. It will be for the financial business to show that suicide was the more likely cause of death.
Coroners have to be satisfied beyond reasonable doubt before they can record a verdict of suicide. If the coroner returns a verdict of suicide, we will decide that the death was not accidental. If the coroner is not satisfied beyond reasonable doubt, they have the option to record an open verdict.
Because we decide what happened on the balance of probabilities (which requires less certainty), it is still open to us in open verdict cases to decide that the death was not accidental. But we will attach significant weight to the coroner’s findings into the cause of death.
When defining the circumstances when permanent total disability benefit will be paid, personal accident policies usually use one of the following criteria:
When the consumer has a policy that refers to them being prevented from carrying on “any occupation whatsoever”, we generally do not consider that it is fair and reasonable to limit benefits to those rare situations where the consumer is completely unable to carry on any occupation whatsoever. Unless we are satisfied that the restrictive nature of the criterion was clearly brought to the consumer’s attention at the outset, we usually interpret the provision to mean “any suited occupation” by reference to the consumer’s education, training, experience etc.
Personal accident policies are "non-indemnity" insurance contracts. The aim is not to return the consumer to the position that they were in before the accident. Instead, they simply pay financial benefit in cases of death or bodily injury where the policy terms are satisfied. They do not compensate for loss of earnings or incapacity from working. Because of this, there is no limit to the total benefit that can be claimed by the consumer – that is, they can normally claim for the same injury under multiple policies. But there may be restrictions if the policies are with the same insurer.
If a disability is defined in the table of benefits included in the policy – and the terms of the policy are met – then benefit is payable. The table of benefits will vary between policies. If there is any disagreement about which category the consumer falls into, we will review the medical evidence and decide what is fair and reasonable in the specific circumstances of that case.
when is a proportion of benefit more appropriate than the full amount?
We may decide that it is fair and reasonable for the financial business to pay a proportion of the benefit in circumstances that do not warrant payment of the full benefit. These cases include:
Where the consumer has been deprived of money because the financial business wrongly turned down their claim, we will usually tell the business to pay compensation at our normal rate of 8% per year simple.
We see many cases where the claim under the policy is delayed. For example, in claims for accidental death, the estate may not be aware that there is a policy in place. As a result, the interest is generally payable from the date the claim would have been accepted, rather than from the date of the death or bodily injury. This is to reflect the fact that a financial business cannot accept a claim of which it is not aware.
compensation for distress, inconvenience or other non-financial loss
In some cases we may decide to tell the business to pay compensation for distress, inconvenience or other non-financial loss that it has caused.
There are several reasons why consumers complain that policies were mis-sold:
In relation to personal accident policies, the most common misunderstandings of terms in the cases we see are:
Complaints about mis-selling generally against the seller who may, or may not, represent the insurer directly. The seller has an obligation to ensure that the policy is suitable for the consumer and that it is adequately explained to them.
When considering these complaints about mis-selling, we will examine the evidence available about the sale.
If the pre-sale and/or policy documentation is unclear about the cover provided, the consumer’s complaint would normally be against the insurer as the provider of the documentation. When considering these complaints, we will examine all of the documentation provided, to see whether it made clear what was covered by the policy and whether it highlighted any unusual limitations or exclusions.
Sometimes income protection policies require benefits under other disability insurance policies to be deducted from any income protection benefit payable. If we decide that the policy terms clearly allow the benefit from a personal accident policy to be deducted in this way, then there may be a potential mis-sale – if this significant limitation of cover was not made clear. In these cases, we will look at the sale of each policy, to see whether the potential impact of having both insurances policies was explained.
If we decide that a policy was mis-sold, we will normally say that there should be a refund of all of the premiums the consumer has paid plus interest of 8% simple per year. We will also consider whether a payment of compensation for distress and inconvenience is appropriate.
But if we decide that the exclusion was unfair or unusual – and that it was not brought to the consumer’s attention – or that the consumer would have been able to obtain a policy elsewhere which would have covered their claim, then we may tell the business to pay for the claim as if the restriction was not part of the policy terms.
Similarly, if we decide that the mis-sale meant the consumer was entitled to rely on statements and representations made by the seller, then we may decide that compensation should be paid either for distress and inconvenience or for the full amount of the consumer’s claim under the policy.
complaints involving personal accident insurance
issue 99, January/February 2012
personal accident insurance: surgical complications
issue 44, March 2005
contact our technical advice desk on 020 7964 1400
This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.