Insurance Contract Law Issues Paper 2 Warranties - Law Commission

B.16 Here a breach of the term does not prevent any liability from arising. It does not
exclude all claims, only those relating to the person with a pre-existing medical
condition. However, the way the term is worded does not require that the preexisting
medical condition causes the claim. In theory, if a child suffering from
asthma was injured in a road accident, the claim would be excluded even if there
was no link between the asthma and the accident.
B.17 What was particularly interesting about this case is that the ombudsman
interpreted the term as requiring proof of a causal connection. The complainant
had cut short her holiday when her mother suffered a heart attack, but the insurer
rejected her curtailment claim on the grounds that her mother had a pre-existing
medical condition. The evidence showed that her mother had suffered from
hypertension for the last 50 years, but her condition appeared to be stable and
controlled. 2
B.18 The ombudsman upheld the complaint and required the insurer to pay the claim.
He commented that the insurers had provided no evidence to show that the
longstanding hypertension caused the heart attack. An internet article suggesting
a general link between the two was not enough.
I do not consider that the firm is able to demonstrate on the balance
of probabilities that [the mother’s] pre-existing medical condition was
directly responsible for the cardiac arrest.
B.19 The decision is noteworthy, as it goes further than the recommendations in the
1980 report. First, it puts the burden of proof firmly on the insurer to show the
causal connection. Secondly, it requires the insurers to show more than a
statistical correlation between hypertension and heart attacks. Instead the insurer
is required to prove that the pre-existing condition is directly responsible for the
event which gives rise to a claim.
B.20 In Case 29, Mrs B had declared that her husband suffered from hypertension,
diabetes and gout, and received notification that these were excluded from the
policy. When Mr B suffered a heart attack on holiday, the insurers relied on policy
wording excluding any claim arising “directly or indirectly” from the pre-existing
condition. They rejected the claim on the grounds that the heart attack arose
indirectly from the previous conditions. The ombudsman pointed to discrepancies
between the policy wording and the other documents Mrs B had been sent, which
did not use the word “indirectly”, commenting:
2
If the firm intends to exclude claims that arise “indirectly” from any
medical condition, this is a very significant restriction on cover and I
consider the firm must make its meaning abundantly clear.
In this case, it was fair and reasonable that the insurers should pay the claim.
In retrospect, her mother may have suffered a possible left ventricular failure the previous
year, but there was no definite diagnosis and the doctor’s suspicions were not conveyed to
her mother.
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