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A strict definition of total permanent disablement

Bopha was a paramedic. While she was unloading an ambulance one day, she fell badly and shattered her ankle. She needed several surgeries, and over the next few years it became clear that she was never going to fully recover. Her mobility was going to be impacted permanently, and she was not going to be able to return to her job. With help from ACC, she started training for other work, but this was going to be a long process.

Luckily (or so Bopha thought) she had $100,000 of personal accident insurance, provided by her workers’ union.

Bopha filed a claim after it became clear that her injury was permanent. However, her insurer did not think her injury qualified for the full $100,000 payment. The insurer said the $100,000 was only available for total permanent disablement. Bopha’s injury was closer to the loss of the use of one foot, which only entitled her to a $5,000 payout.

Bopha complained to FSCL.



Bopha did not think this could possibly be right. Bopha said she had been permanently disabled, to the extent she could no longer work. Surely, she said, this should entitle her to the $100,000 for permanent disablement.  



We looked at the insurance policy wording. We found that the insurer was right – Bopha was only entitled to the $100,000 pay-out if she had suffered a total, permanent disablement. And ‘total disablement’ was defined very narrowly: to be ‘total’ disablement, the injury needed to do more than keep Bopha from her current line of work; the disablement needed to be so severe that she could not work at all, even after rehabilitation and retraining.

Where an injury amounted to something less than total disablement, the policy only paid out a percentage of the $100,000. We agreed with the insurer – Bopha’s injury was analogous to losing the use of a foot, and that only entitled Bopha to 5% of the $100,000 sum insured.

We had a great deal of sympathy for Bopha. Her $5,000 pay-out was very little compared to the impact her injury had on her life and her finances. But the $5,000 was what Bopha was entitled to her under her policy, and we could not overturn or alter the terms of her policy wording.



After hearing our explanation, Bopha accepted that the insurer had accurately assessed her cover, and she decided to accept the $5,000 from the insurer. However, she did not think that this insurance policy was suitable for her workers’ union. She told FSCL she was going to write to her union and encourage them to consider other insurance options. 


Insights for consumers

When you are signing up for a new insurance policy, it is worthwhile taking a look at the definitions section and checking for anything which seems unusual. If you have any doubts, it might be worth taking the policy to a professional insurance adviser. This can help ensure you fully understand the limits of your cover and can give you some confidence that your policy is right for you and your individual needs.