Victims who discovered it pays to read small print
A STEADY stream of unfortunates passes before the Insurance Claims Complaints Bureau; not only have these people had dreadful accidents but they have also had unpleasant disputes with their insurers.
Nearly 60 per cent of complaints before the bureau concern differences over the interpretation of policy terms or disagreements over amounts offered as indemnity.
The bureau says most questions of interpretation involve misunderstandings by policyholders. Even so, it argues the benefit of the doubt should go to the policy-holder when an insurance policy contains ambiguities.
In one case, for example, a woman suffered a neck injury while in China and was admitted to hospital for 33 days.
She was able to claim a daily cash benefit under her hospital-income policy, but was denied a double cash benefit.
The insurer maintained the double benefit applied only to trips of no more than 60 days.
The woman had indicated on her claim form that the intended duration of her stay was 21/2 months.
The board decided it was not clear whether the double benefit applied to any hospitalisation during the first 60 days of a trip.
Consequently, the board ruled the insurer should honour the woman's claim.
Another case involved confusion resulting from similar terms having different meanings in different policies - in particular, 'permanent disability' in a personal-accident policy versus 'permanent loss of earning capacity' in a workers' compensation policy.
A manager at a trading company hurt her left knee at work and the Employees' Compensation Board ruled she had permanently lost 5 per cent of her earning capacity.
She lodged a claim for permanent disability under her personal-accident policy.
In such policies, however, permanent disability is usually defined as loss of a limb or other body part, so the board upheld the insurer's rejection of the claim.
Most disputes over the size of indemnity payments involve motor vehicle insurance.
Complainants wrongly expect to receive the full insured amount of their policy when their insured vehicle is declared a total loss.
In fact, insurers are only required to pay the market value of the lost vehicle.
In one case, a man took out a $200,000 comprehensive policy. After his car was stolen two months later, the insurer offered to settle for just $130,000.
The man argued that since he had paid a premium on the estimated value of $200,000, he should receive the insured sum in full.
But, given an independent expert's view of the car's real market value, the board ruled for the insurance company.