Insurance Contract Law Issues Paper 2 Warranties - Law Commission

(4) In Case 20, the policy excluded “anything which happened before you
took out” the insurance “and which you could reasonably have known
you might claim for”. The evidence showed that the complainant had
sought legal advice about her husband’s death before taking out the
policy, and the ombudsman held that the claim was excluded.
(5) In Case 6, the policy covered disputes which “were capable of being
heard before an Employment Tribunal”. The complainant could have
taken their dispute to a tribunal, but their damages would have been
limited to £25,000. Instead, they issued court proceedings for £350,000.
The ombudsman found that in the plain and ordinary sense of the words,
this was not a claim capable of being heard in the Employment Tribunal.
B.27 In the final case, the ombudsman rejected the complainant’s request to be
allowed her own choice of solicitor.
B.28 In these cases, the ombudsman took the view that the terms were relatively easy
to understand, and corresponded with consumers’ legitimate expectations. In
these circumstances, ombudsmen will apply the exclusions as they are written.
DISABLEMENT COVER
B.29 Five cases in the sample involved the definition of total disablement. This type of
protection can be included within a variety of policies – including income
protection, loan protection, critical illness and health policies. The definition of
disablement raises similar issues, irrespective of the type of policy in which it is
contained.
B.30 In three cases, the cover was available if the policyholder was prevented from
carrying out their normal occupation. In all three, the complainants could not
perform their previous jobs, and the question was whether they could perform the
same occupation for other employers. In Case 11, the insured was a marketing
manager. The ombudsman accepted that he could not do the substantial physical
activity involved in his current job, but thought that he could perform other
marketing manager jobs involving more sedentary, administrative duties. In Case
23 the insured was off work for stress and depression following workplace
bullying. Again, the ombudsman found that she could work for another employer
as a graphic designer. By contrast, in Case 15, the insured was a
warehouseman. The ombudsman thought all warehouse jobs would involve
substantial manual labour, which the insured was unable to perform.
B.31 In the other two cases, the policy term provided cover only if the insured was
unable to do any job for which they were suited by education, training or
experience. In Case 24, the complainant had lost a job involving public speaking
following operations to remove a malignant tumour from her larynx. She worked
part time doing clerical duties. The ombudsman held that there were other jobs
she could perform. Similarly, in Case 13, the insured had lost his job following
damage to his thumb, but worked voluntarily in a Citizens Advice Bureau. The
ombudsman thought there were many jobs he was capable of doing.
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