SERVICE: Health
OUTCOME: Not upheld
Issues: Policy Exclusion
Mr C held an accidental injury policy with the insurer.
In October 2022, Mr C made a claim under the policy for a septoplasty and diathermy septum surgery, because he had fallen downstairs and fractured his nose. The insurer declined the claim, because the medical evidence showed that the surgery did not directly result from the accident but was due to a “longstanding issue” of epistaxis.
In July 2023, Mr C made a second claim under the policy, because he had suffered a nasal septum perforation as a result of the first surgery, requiring a second surgery to repair it. The insurer declined the second claim on the basis of an exclusion for injury arising “directly or indirectly from … [a]ny illness”, because it was directly related to the first surgery.
Mr C made a complaint, saying that the second surgery was caused by a treatment injury during the first surgery, and had been accepted by ACC as a consequential injury/treatment-related accident.
The case manager’s assessment
When an insured makes a claim under an insurance policy, the law says that it is up to them to prove that they have suffered a loss, which is covered by the policy. [1] Here, this meant that Mr C had to show that he had suffered an “accidental injury”, which resulted in the surgery.
The insurer can then choose whether to apply a policy condition or exclusion to limit or decline a claim. If the insurer does choose to do so, it must prove the condition or exclusion applies.
The policy only provided cover for “accidental injury”. The medical evidence showed that Mr C required the first surgery, because of a longstanding history of epistaxis, which was not an “accidental injury”. Therefore, the first surgery was not covered under the policy.
The insurer was able to apply the exclusion to the claim, if an injury arose “directly or indirectly” from any illness. The term “indirectly” has been interpreted legally, to mean that a more remote link in the chain of causation is contemplated than the direct cause.
Although ACC had accepted the second surgery as an accident, its terms and conditions were different than the policy’s. The second surgery would not have occurred but for the first surgery. Therefore, the second surgery was within the chain of causation, meaning it arose “directly or indirectly” from any illness. As such, the insurer was able to apply the exclusion to the claim.
Complaint No: 00230386
[1] This is known as a prima facie claim.