Insurance Contract Law Issues Paper 2 Warranties - Law Commission

4.86 Case 14 concerned a critical illness policy offering a defined sum in the event of a
heart attack. A policy term defined “heart attack” as “the death of a proportion of
heart muscle as a result of inadequate blood supply”, as evidenced by three
symptoms: chest pain; “electrocardiograph changes”; and raised cardiac
enzymes. The complainant was diagnosed and treated for a heart attack
involving pain and elevated enzymes, but which did not show changes on an
ECG. The insurers refused the claim on the grounds that one of the essential
elements of the definition was not met.
4.87 The ombudsman pointed out that neither the key features document nor the
headline illness highlighted that a heart attack was only covered if it was of a
certain severity or if it involved satisfying a three-limb test.
When a definition significantly restricts the meaning of the headline
illness in a way that is inconsistent with either a policyholder’s or a
doctor’s reasonable understanding of when a critical illness or event
has occurred, then I consider it would be unfair of a firm to rely on a
narrow interpretation of a definition to defeat an otherwise valid claim.
In my judgment, the complainant’s claim should be met because it
falls within the spirit of what the policy was designed to cover and
how it was sold.
4.88 It is worth noting that the FOS will be prepared to strike down a narrow definition
of the risk contained within the policy small print if this was not in accordance with
reasonable expectations and was not made clear to the consumer.
37