Pre-existing medical condition indirectly causes loss

Robert was an overseas student, studying at a New Zealand university.  Before travelling to New Zealand, Robert arranged travel insurance that would cover, among other things, Robert’s travel costs if he needed to return home due to the unforeseen death of a relative.

While Robert was in New Zealand his father, Peter, died.  The causes of death were respiratory failure, aortic stenosis, and follicular lymphoma.  When the insurer sought information about Peter’s medical history it discovered he had pre-existing aortic stenosis, which had not been disclosed when Robert arranged insurance.  The insurer declined Robert’s claim for the $4,000 in travel expenses, because his father had died from an undisclosed pre-existing medical condition.

Robert’s view

Robert did not accept his father’s death was caused by aortic stenosis, but by the more recent diagnosis of follicular lymphoma.  Robert also said he was unaware his father had aortic stenosis and said the insurer had not done enough to draw the exclusion for pre-existing conditions to his attention when he arranged the policy.  Robert said if he had known about the pre-existing condition exclusion, he would have asked family members about their health, in order to disclose this information to the insurer.

Robert complained to FSCL.

Review

The insurance policy

Whenever we review an insurance complaint we look first to the insuring clause.  If the insuring clause is met we then look to see whether any exclusions apply.  In this case we were satisfied Robert’s claim met the insuring clause because his father’s death had been unexpected, however the policy excluded from cover “…any claim arising directly or indirectly out of … a relative’s Pre-existing Medical Condition…”.

Pre-existing medical conditions

Peter had been diagnosed with a number of medical conditions before Robert travelled to New Zealand, including aortic stenosis, cardiac failure and chronic kidney disease.  Although there may have been a number of causes contributing to death, under the doctrine of proximate cause we needed to identify the cause predominately contributing to the loss.  The policy referred to a “claim arising directly or indirectly” from a pre-existing medical condition, so if any of the pre-existing medical conditions contributed to Peter’s death, even if they were not the sole or main cause, the insurer was entitled to decline the claim.

Although follicular lymphoma contributed to Peter’s death, on the medical evidence available it was a contributing factor and not the primary cause.  Medical evidence suggested that Peter’s aortic stenosis indirectly caused his respiratory failure, and so the insurer was entitled to decline the claim.

Insured’s responsibility to read the policy

It was our view that Robert was obliged to familiarise himself with the policy provisions.  But even if he had noticed the pre-existing medical condition exclusion it would not have made any difference.  The insurer explained that while the insured can disclose a pre-existing medical condition and potentially be covered by the policy, the policy does not cover a relative’s pre-existing medical conditions.  Even if Robert had disclosed his father’s medical history, the insurer would have declined the claim.

Outcome

Robert did not respond to our preliminary view.  We assumed he did not wish to pursue the complaint further and discontinued our investigation.

Our insight

All insurance policies have limitations.  It is a good idea to familiarise yourself with the policy before travel so that you know whether or not your insurer is likely to cover your expenses if you need to change your plans.