In mid 2013 Helen and Brian were in Europe on holiday. While on holiday they received tragic news that Helen’s son, Andrew, had passed away from what appeared to be suicide. Helen and Brian immediately returned to New Zealand, and incurred costs of around $7,500 which Helen claimed from her travel insurance company.
The insurance company declined the claim on the basis of two exclusion clauses in the policy. The first clause excluded cover where the claim arose directly or indirectly out of the suicide of a person on whom the insured’s travel depends. The second clause excluded cover where the claim arose directly or indirectly out of any pre-existing medical condition of a relative.
Helen argued that the exclusion clauses did not apply to the circumstances of her claim. Helen said she was unaware that her son was on medication for depression and did not know he was at risk of taking his own life.
We could not complete our investigation until the final coroner’s report on Andrew’s death. The report was released by the coroner’s office in September 2014 and stated conclusively that Andrew died as a result of suicide which was not accidental or unintended.
We firstly looked at the exclusion clause about the suicide of a person “on whom the travel depends”. We said that it was clear that the phrase was included in the clause because it was intended to encompass a specific class of people. In other words, if the phrase did not appear and the clause just read: arising directly or indirectly out of suicide, arguably the clause could exclude cover in the circumstances of Helen’s claim.
Helen argued that the travel did not depend on Andrew; she said she went travelling with her partner, Brian. She said that Andrew’s state of health did not affect her travelling; he did not go on the trip with her and Brian, and as far as Helen was aware Andrew was in good spirits and welcomed her going on a trip of a lifetime.
The insurance company argued that because the insuring clause (providing cover in the event of an unforeseeable death of a relative), refers to ‘relatives’ then ‘a person on whom your travel depends’ in the exclusion clause includes relatives, travelling companions and business partners. The insurance company also argued that the travel did depend on Andrew by the mere fact that Helen and Brian returned immediately to New Zealand when he died.
We thought the clause was ambiguous, and applied the contra proferentem rule in favour of Helen. The rule of contra proferentem is that where a clause in a contract is ambiguous and there are two or more possible interpretations of the clause, the interpretation which favours the party which did not draft the contract should be preferred (i.e. Helen’s interpretation).
In coming to our decision we looked at the remainder of the policy to see whether the phrase ‘on whom your travel depends’ was used in other sections. The phrase appeared in another policy section, in which the phrase applied to people who were actually travelling. In our view this other clause informed the exclusion clause in question and we determined that ‘on whom your travel depends’ meant a person travelling, such as a travelling companion.
We also thought that if the insurance company intended ‘on whom your travel depends’ to include relatives, it could have stated ‘the suicide of a relative’. We noted that if the insurance company intended ‘on whom your travel depends’ to mean anyone, the clause should have stated that there would be no cover for any claim arising out of suicide, and not include the phrase ‘on whom your travel depends’.
We also drew guidance from a decision issued by the Financial Ombudsman Service in Australia (“FOS”) on the same issue and about a similar policy wording. In that decision FOS said that a policy would have to be absolutely specific if it was to exclude cover where a relative in the insured’s country of residence took their own life out of the blue.
Pre-existing medical condition exclusion
The coroner’s report outlined that Andrew had a history of depression and anxiety and intermittent suicidal thoughts. The report also outlined that Andrew had suffered and sought the help of professionals particularly from 2012 onwards, after he had been assaulted which affected his ability to work and changed his life drastically.
At a session with his psychologist soon before his death, it appeared that Andrew had been forward focussed and other professionals involved with his care had noted they did not consider Andrew to be at high risk of suicide, and were shocked by his death.
It was clear that Andrew was unwell. However, the key question was what Helen knew about her son’s health, when we were analysing the terms and conditions of the insurance policy.
Applying this information to the insurance policy, we noted that when looking at the pre-existing medical condition of a person who is not the insured, the insured person, i.e. Helen, had to know that Andrew had received medical treatment, medical advice, or taken prescribed medication for the pre-existing medical condition in the 30 day time period before Helen purchased her trip.
Helen said she did not see Andrew regularly especially after he moved to another city. Helen said she knew Andrew’s life was drastically changed after he was assaulted in 2012 but she did not know he was on any medication or receiving treatment for depression. Helen said she had no idea there was the possibility of Andrew taking his own life and that she would never have gone travelling if she had been aware of anything to indicate he was at risk of taking his life.
We found that Helen did not have the requisite knowledge of Andrew’s health for us to say that the definition of ‘pre-existing medical condition’ had been satisfied. We also noted that the insurance company had accepted that the insuring clause was satisfied, which mentioned the unforeseeable death of a relative. We found it hard to reconcile this with the insurance company’s view in relation to the exclusion clause that Helen had the requisite knowledge of Andrew’s health to know it would affect her trip.
We found therefore that neither exclusion clause applied. The insurance company accepted our decision and paid the claim.