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Insurance cover misunderstanding

Sam believed he had arranged income protection cover for redundancy in 2012 through an insurance adviser who worked for a large company. He did not think too much about it again until 2020 when he was made redundant. Sam contacted his insurer and discovered that the redundancy income protection cover he believed he had arranged, was in fact disability income protection cover. When Sam was unable to resolve the complaint directly with the adviser, he referred the complaint to FSCL.



Sam complained that his adviser had failed to follow his advice. He would never have asked for disability income protection cover because he already had disability cover through another provider. Sam also said that English was his second language and he may not have understood the word ‘redundancy’ when he applied for the insurance. However, Sam certainly told the adviser that he wanted insurance to cover him if his employer ‘got rid of me’.

The adviser company replied that the adviser Sam spoke to in 2012 no longer worked for the company, but all Sam’s records related to disability cover. The insurer sent out both the policy and a summary setting out the cover available. All the information related to disability. The adviser also said that Sam did not tell it about the existing disability cover he had in place. Sam had only mentioned a life insurance policy through a bank. Sam had not asked for a comprehensive insurance review and had limited advice to disability insurance cover.



It is not unusual for us to have to evaluate events that happened a long time ago. We were fortunate in this instance that the adviser had kept clear records. The written records contained no reference to redundancy cover in either the fact find or the actual insurance application.

Sam obviously did not have written records to fall back on. We did give considerable weight to his recollection, given that this would have been an important and unusual event in his life.

However, the written record was overwhelming, particularly the insurer’s letter, which set out clearly and in a straightforward manner the cover Sam had purchased. We considered that if Sam had read this letter, as well as the letter from the adviser, he would have been in no doubt that he had purchased disability cover. If Sam had realised the mistake in 2012 the misunderstanding would have been rectified within the insurer’s ‘free look’ period.

We did take into account that English is Sam’s second language, but noted that the adviser had recorded on the form that Sam was very well qualified and held the equivalent of a tertiary education.



We were unable to uphold Sam’s complaint. Sam was very disappointed but agreed to discontinue his complaint.


Insights for consumers

It is very important to read all the information you receive from your adviser and insurer. Even if you believe you know what insurance cover you arranged, misunderstandings can occur.