Personal accident insurance can be provided in two ways:
Most personal accident policies pay out lump sum benefits when the policy terms are satisfied – which usually means when the consumer dies or suffers bodily injury as a result of an accident or unforeseen event.
Policies usually state that the consumer is not covered if the death or injury is caused by “sickness, disease or any naturally occurring condition or process”. To be met, the consumer’s claim must not fall within this or any other exclusion clause in the policy.
Generally, personal accident insurance policies cover as standard:
Some policies also cover permanent partial disablement, temporary total disablement and/or temporary partial disablement.
But personal accident policies only offer protection against accidental death and bodily injury – and not against sickness or general disability, which may be covered by other types of insurance.
Levels of benefit, definitions of key terms and areas of cover and exclusions vary from policy to policy. This note covers situations we most frequently see – but we will always decide a complaint based on the terms of the policy in question and the facts of the individual case. When we look at a case, we will consider whether the business took the consumer’s particular needs into account.
Complaints that consumers refer to us most frequently are that the financial business wrongly refused to pay the claim when deciding that:
The consumer might also complain that:
Even though personal accident insurance only pays out following an accident, we sometimes find that the word “accident” is not used in the policy document. Instead, the policy says that the consumer must suffer death or bodily injury as “the direct result of an accidental, external, violent and visible cause” (or similar words to that effect).
If there is no definition of "accidental" in the policy, we generally apply a definition of the word as it is commonly understood: an unforeseen or unexpected and unfortunate occurrence. It can either be the cause or the result that is unexpected – but it must be at least one of them.
We will look at the particular circumstances of each case to decide whether what has happened meets the policy’s requirements. For example, a car accident may be external, violent and visible – whereas a heart attack is violent and visible but not external.
However, we will carefully consider how likely it is that the death or bodily injury is attributable to a particular cause. For example, a heart attack could lead to a car accident – or a car accident could lead to a heart attack. Or it could be that the two events are completely unrelated.
Where the consumer has died, we will look at the evidence we have to establish the most likely sequence of events leading up to the death. This may involve addressing difficult issues about the cause of death. For example, if we decide it is likely that the consumer had a heart attack before the accident, we need to consider whether they were killed in the accident, or whether they would have died anyway from the heart attack.
Businesses sometimes turn down claims for death or bodily injury following surgery, saying:
All surgery involves some risk – so we try to take a common-sense approach. We will consider whether we think the risks were explained to the consumer and they were unlucky – or whether something happened that was unexpected, unplanned or as a result of negligence before, during or after the surgery.
Most personal accident policies require the death or bodily injury being claimed for to have resulted solely and directly from an accidental cause. They also usually state that the consumer is not covered if the death or bodily injury is caused by “sickness, disease or any naturally occurring condition or process”.
This means that businesses turn down claims on several grounds:
Businesses usually refer to medical reports and records, the death certificate and/or the coroner’s report when declining claims for these reasons.
We will look at the circumstances of each individual case to decide how far we think the accident contributed to the death or bodily injury that is being claimed for. So we will consider whether the accident alone would have resulted in the death or bodily injury.
We are unlikely to decide that it is reasonable for a business to totally avoid liability for a claim just because there were contributory causes in addition to the accident. But we might not uphold a complaint if we do not think that the accident was a significant contributing factor.
If we think it is more likely than not that the accident was a contributing factor to the death or bodily injury – even if it was one of many factors – we might tell the business to pay part of the claim. To decide what proportion the business should pay, we will consider how far the accident contributed to the death or bodily injury in comparison with the other factors (see below).
In some cases it might be that:
For example, it might have been likely that a consumer with arthritis would become permanently and totally disabled within ten years because of the condition. But an accident may have brought the effects forward so the consumer immediately became permanently and totally disabled.
Some policies do allow for proportionate payments in these situations. But even if it is not in the policy, we will look at the individual circumstances of each case to decide whether we think it would be reasonable for the business to meet part of the claim (see below).
Personal accident policies generally include exclusions of cover. For example, the policy may say a claim will be rejected if:
The wording and effect of these exclusions will vary between policies – so we will carefully consider the policy in question.
Many policies will also exclude claims for death or bodily injury resulting from specific activities such as driving a vehicle with less than four wheels, diving, mountaineering, rock or cliff climbing, pot-holing, parachuting, professional sports, boxing, racing and flying when not a fare-paying passenger.
Policies usually also contain exclusions for various categories of “war” and “invasion” – as well as for claims arising from serving in the armed forces (although specialist forces personnel policies are available).
In each case, we will see whether the business can provide evidence showing – on the balance of probabilities – that the exclusion applies to the particular situation.
Most personal accident policies contain an exclusion that means if the death or bodily injury is caused by alcohol and/or drugs, the claim will not be paid. Again, the wording will differ from policy to policy – so we will check to see what the particular cover excludes.
Where the cause of an accident is in question, we will carefully consider whether the accident simply happened after someone consumed alcohol and/or drugs – or whether the consumption of alcohol and/or drugs directly caused the accident.
We will look at whether the business can show it is more likely than not that the consumption of alcohol and/or drugs caused the accident – or meant that the consumer did not escape the consequences of an accident as they may otherwise have done.
We will also consider:
For example, if the consumer was run over because they were lying down in the road while drunk, we might decide they could have reasonably anticipated that death or bodily injury would happen as a result.
But if a drunken consumer was hit by a speeding car while crossing the road, we might be less likely to decide that they anticipated – or reasonably could have done – that death or bodily injury would happen.
If we think the accident probably would have happened whether the consumer was drunk or not, we might decide it is unfair for the business to apply the exclusion clause.
A policy may contain an exclusion clause relating to deliberate self-inflicted injury or “reckless exposure to danger” – meaning that if death or bodily injury results from either of these, benefit is not payable. Some policies may refer to “needless exposure to peril” or “exposure to exceptional danger”.
The main issue involved in complaints about this exclusion is whether a particular action is a “reckless exposure to danger”. For example, although some people may argue that cycling without a helmet is a “reckless exposure to danger”, others might say that it is common practice and part of ordinary life. On the other hand, it would be harder to argue the same point for base-jumping.
However, many of the situations we see are less clear-cut. So we try to take a common-sense approach – taking into account the policy terms and the individual circumstances of each case.
Sometimes, a business will reject a claim because it believes that the consumer committed suicide. We will ask the business to show us evidence that – on the balance of probabilities – suicide was the most likely cause of death.
Coroners have to be satisfied beyond reasonable doubt before they can record a verdict of suicide. So if the coroner returns a verdict of suicide, we will decide that the death was not accidental.
However, if the coroner is not satisfied beyond reasonable doubt, they may record an open verdict. This means we will still need to decide what happened on the balance of probabilities, taking into account the coroner’s findings into the cause of death.
permanent and total disability
There are different definitions of what a ‘permanent and total disability’ is in policies. In personal accident policies, the disability usually has to prevent the consumer from working. Most of these policies use one of the following criteria:
However, we generally say it is unreasonable for a business to limit benefit to the rare situation where the consumer is completely unable to carry out “any occupation whatsoever”. So we are unlikely to support a strict interpretation of this term – unless we think that the consumer was aware of its restrictive nature at the outset. Instead, we usually interpret it to mean “any suited occupation” based on the consumer’s education, training, or experience.
loss or loss of use
Where the policy covers the total loss of, or loss of use of, a specified body part or sense, we will look at any specialist medical opinion on the extent of the injury. We’ll think about whether the business should pay because the extent of the injury means it could reasonably be called ‘total’ loss.
Personal accident policies are “non-indemnity” insurance contracts – meaning they will not (and in most cases cannot) put the consumer back in the position that they were in before the accident. If its terms are met, a policy will simply pay financial benefit in cases of death or bodily injury.
Because they do not compensate consumers for loss of earnings or incapacity from working, a consumer can usually claim for the same injury under several different policies – though there may be restrictions if the policies are with the same insurer.
Benefit will be payable if a disability is defined in the “table of benefits” included in the policy, and the terms of the policy are satisfied. The table of benefits will vary between policies. Where the consumer and the business disagree over which category the consumer falls into, we will look at any medical evidence to assess what we think would be reasonable in each individual case.
In some cases, we do not think that the full benefit should be paid – but we decide that it is fair and reasonable for the business to pay a proportion of it. For example:
Where we decide that the business wrongly turned down the consumer’s claim and so the consumer has been deprived of money, we will usually tell the business to pay compensation at our normal rate of 8% simple per year.
In some situations, the claim under the policy is delayed – for example, in claims for accidental death, the estate of the person who has died may not be aware that there is a policy in place. In these cases, we generally say that the interest is payable from the date that the claim would have been accepted by the business – rather than from the date of the death or bodily injury. This is to reflect the fact that a business cannot accept a claim it is not aware of.
compensation for non-financial loss
In some cases, we decide that the consumer should be paid compensation for non-financial loss caused by the business – such as the emotional impact on the customer.
There are several reasons why a consumer might say they were mis-sold a personal accident policy:
The most common misunderstandings we see among consumers are that:
Mis-selling complaints are generally made against the seller – who may or may not represent the insurer directly. Insurance regulations place an obligation on the seller to ensure that the policy is suitable for the consumer and that it is adequately explained to them. We will examine all the available evidence about the sale to decide if the seller met these requirements.
However, if it is the pre-sale and/or policy documentation that has caused the confusion about the cover, the consumer’s complaint would normally be against the insurer – as the provider of that documentation. We will look at all of the documentation the consumer would have seen and decide whether this made clear what was covered by the policy and highlighted any unusual limitations or exclusions.
Income protection policies sometimes state that if the consumer has any other disability insurance policies, the amount of this other benefit should be deducted from any income protection benefit payable.
In these cases, we will first establish whether the policy terms clearly allow this arrangement. And if they do, we will then decide if this significant limitation of cover was made clear to the consumer. We will look at the sale of both policies to see whether the potential impact of having both insurances was explained.
compensation for mis-sale
If we decide that a policy was mis-sold, we will usually say that the business should refund all of the premiums the consumer has paid plus interest of 8% simple per year. We will also consider whether the business should pay the consumer compensation for any trouble and upset - or other non-financial loss - caused.
In some cases, we might tell the business to pay the claim as if the restriction was not part of the policy terms. This might happen if we decide that the exclusion was unfair or unusual and was not brought to the consumer’s attention – or if the consumer could have bought a policy elsewhere which would have covered their claim.
Similarly, if we decide that the mis-sale meant the consumer was entitled to rely on statements and representations made by the seller, then we might decide that the full amount of the consumer’s claim under the policy should be paid, or that compensation should be paid for the trouble and upset caused - or both, in some cases.
Ombudsman news case studies and features involving personal accident insurance
complaints involving personal accident insurance – issue 99, January/February 2012
personal accident insurance: surgical complications – issue 44, March 2005
contact our technical advice desk on 020 7964 1400
This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.