Jessica purchased travel insurance in April 2017 for an upcoming trip in September. Prior to departure, Jessica had a flare-up of her pre-existing medical condition and was advised not to travel by her doctor. Jessica cancelled her trip and filed a claim with her insurer for irrecoverable travel and accommodation costs of $3,725.
The insurer declined Jessica’s claim on the basis that her pre-existing condition was excluded from cover due to not being appropriately disclosed. In particular, the insurer referred to the fact that Jessica had attended a hospital in the USA in 2015 for the same condition.
Jessica requested a review of the insurer’s decision, as she maintained that she had declared her condition. The insurer said that Jessica had incorrectly answered the below pre-assessment question by answering “no”:
“Do you have any ongoing or chronic condition that has been treated in hospital in the last 5 years?”
In 2015, Jessica had a flare-up of the condition and needed to obtain medication. Due to the timing of the flare-up, she visited an afterhours GP at a clinic within a hospital and was seen for a 10-minute consultation.
The insurer said that Jessica was treated at a hospital and, as such, needed to declare this during the medical pre-assessment. Jessica disagreed and complained to FSCL.
Dispute
Jessica said that the question implied being treated as an inpatient at a hospital, and therefore she had answered correctly.
The insurer preferred a broader interpretation of the question. They said that had Jessica indicated she had been treated at a hospital, they would have asked further questions to establish whether cover for the pre-existing medical condition would be approved.
Review
The issue was whether Jessica had been “treated in hospital” for her medical condition prior to the issuing of her policy. Both Jessica and the hospital confirmed that Jessica was not admitted to the hospital and was instead treated as an outpatient.
The distinction between inpatient and outpatient care was critical in this claim. We found that the question about treatment implied that admission to, and treatment in, a hospital was necessary to trigger a “yes” answer. In other words, the question was asking whether the applicant had received inpatient care for a condition. To hold otherwise would create an artificial distinction between outpatient care at a hospital and outpatient care provided elsewhere.
At the very least, the question was ambiguous. According to standard legal interpretation, where a term is ambiguous, the meaning that is adopted should be the meaning that works against the interests of the party who wrote the term. This principle would support Jessica’s view that the question was asking about inpatient hospital care.
As Jessica had not been admitted for inpatient care, we found that she had answered the question correctly.
Resolution
We found that the insurer should accept the claim and pay Jessica in accordance with their obligations under the policy.
Both parties agreed to this outcome.
Insights for participants
Insurers should ensure that their pre-assessment questions are not ambiguous to avoid confusion.
Where there is an ambiguity in the policy or policy proposal, the ambiguity will be resolved in favour of the insured person as the insured person did not write the policy or proposal.
