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Insurance policy fails to live up to expectations

Jason is dyslexic and relied heavily on the insurance salesperson’s advice when purchasing accident insurance.  Jason understood the insurance was a ‘top up’ to ACC and would, like ACC, cover him indefinitely.  Jason had discussed the insurance with his mother, Meg, but said the salesperson did not give him a copy of the policy for Meg to review.  After Jason was injured in a motorbike accident, Jason asked Meg for help with the insurance claim process.

Meg asks for information about Jason’s insurance cover

Meg was not familiar with Jason’s policies so called the insurer for more information.  When Meg spoke to Urmila she discovered Jason had eight policies providing cover for accident and sickness.  Urmila went through the policies describing the cover provided.  After the conversation Urmila wrote to Meg, sending her a synopsis of all Jason’s policies.  The letter did not say that the accident policy was limited to six months’ cover from the date of the accident.

Continuation forms required

With Meg’s help, Jason submitted a claim and the claim was accepted. 

The insurer required Jason to submit continuation forms, signed by his doctor, confirming that Jason was still totally disabled.  Jason was being treated as an outpatient at the fracture clinic.  In order to have the continuation form completed Jason had to wait at the clinic for the doctor to finish seeing all the patients before the doctor had time to sign the continuation form.  On one occasion Jason had to wait at the hospital for five hours to have the form signed. 

Claim process inconvenient

Meg called the insurer to explain Jason was finding the claims process very difficult, not only did Jason have to wait at the hospital to have the continuation forms signed, but mail from the insurer in Australia could take as long as a month to arrive.

Claim period ends unexpectedly

Meg called the insurer again, and spoke to Andrew.  Meg was concerned that the continuation form, signed by the doctor, that she was about to submit had the wrong dates on it.  Andrew told Meg not to worry, the claims person would work out the correct dates. 

About a fortnight after Meg’s conversation with Andrew, Jason received a letter from the insurer advising that it had made the final payment under the accident policy.

Jason was shocked his cover had ended, believing that the cover was a top-up to ACC, and like ACC, would continue indefinitely.

Meg’s view

On Jason’s behalf, Meg complained to FSCL that Jason’s cover had ended.  Not only had the insurance sales people given Jason the impression that the cover would last indefinitely, but after making the claim no one had advised that the cover would only last for six months.  Meg said that Andrew should have told her that the claims process was about to end, saving Jason the trouble of having a further continuation form signed.

Meg also explained they found the claims process inconvenient.  Mail took as long as a month to arrive and the insurer required continuation forms to be signed by Jason’s doctor requiring him to wait a long time at the hospital to have the forms signed.


Cover limited to six months

We explained to Meg and Jason that the policy only provided cover for the first six months of Jason’s injury, so the insurer had paid the correct amount owed under the policy.

We listened to Meg’s telephone conversations with the insurer and discovered that both Urmila and Andrew had mentioned that the cover would cease after six months.  When we sent the recording to Meg she said that she was under considerable stress at the time of the conversations, both conversations were long covering a lot of information and Meg simply had overlooked the advice that cover would only last for six months.

We agreed Andrew should have told Meg the claim was about to end, but given the timing of the conversation and Jason’s appointments, the failure to give this advice had not caused Jason any inconvenience.

Insufficient evidence of misleading advice by sales people

We gave careful consideration to Meg’s complaint about the misleading advice given by the sales representatives.  However, even if the sales representatives had compared the policy to ACC, we had insufficient evidence on which to find that the sales representative had given the impression the cover would last indefinitely. 

Policy provided

In any event the insurer provided a copy of Jason’s application where he had signed, acknowledging he had received a copy of the policy.  Although Jason is dyslexic and would have relied heavily on what he was told by the sales representatives, he could have asked Meg to check his understanding against the policy wording.


It is probably inevitable that the insurance claim process is inconvenient, so for us to recommend compensation we need to be satisfied that the insurer has done something out of the ordinary causing Jason and Meg inconvenience.

While it would have been inconvenient to wait in a hospital for five hours to have a form signed, the policy required confirmation from Jason’s medical practitioner that he remained eligible under the policy.  Unfortunately, Jason’s medical practitioner was the fracture clinic doctor who was not prepared to deal with paperwork until after he had seen all the patients.  Although it would have been inconvenient to wait five hours to have a form signed, this inconvenience was caused by the New Zealand health system and not the insurer.

It would also have been inconvenient, and not acceptable, to wait for a month for mail to arrive from Australia, but we were not satisfied the inconvenience caused was sufficiently serious to warrant compensation.  We encouraged the insurer to review its communication with customers, and consider emailing correspondence rather than rely on the post.


We were satisfied the insurer had correctly paid the claim under the policy and were unable to uphold the complaint.  We were not satisfied that the inconvenience caused by the insurer was sufficient to require compensation.

Our insight

Miscommunication is often at the heart of complaints.  This complaint is an example of a misunderstanding at the outset that, due to the claimant’s stress, was not corrected when the claim was lodged.  Claimants are often under considerable stress, and may not absorb all the information in a conversation.  We encourage insurers to provide full and complete information, both verbal and written, to increase the chances their customers will understand both the extent and limitations of the cover.