Personal Accident insurance

Surgical accidents

Personal accident policies normally contain a schedule of benefits, indicating a fixed sum to be paid in the event of each of a range of injuries. Typically a policy will pay out only if the policyholder suffers “accidental bodily injury or death solely and directly as a result of an external, violent and visible cause”. A difficulty can arise when a policyholder suffers injury or dies in the course of a medical procedure. Some insurers argue that this is not “accidental bodily injury or death” or that the cause is not “external, violent and visible”. No medical procedure is entirely risk free, and the risks should be explained to the patient by the doctor before treatment.

In Ombudsman News 44, however, the FOS indicated that it felt that there were two categories of case which should be distinguished:

  • cases where the patient was simply unlucky enough to fall into the small class of those who inevitably and unavoidably suffer complications as a result of surgery;
  • cases where something unplanned or negligent happened before, during or after the surgery.

In the latter case the FOS is prepared to ask insurers to meet claims.This approach is illustrated by the FOS in two examples taken from its files:

  • Mrs G had an operation to remove a lump from her neck. During recovery, the wound started to bleed profusely, resulting in a massive haemorrhage. As a result of this, Mrs G died. The insurer refused to pay a personal accident claim. The FOS supported its decision. There was no accident: Mrs G was simply unfortunate to be one of those who suffer this type of complication.
  • Mr T underwent minor surgery to correct a prolapsed disc. The operation appeared to be uneventful, but he later suffered haemorrhaging from a vertebral artery and died. The insurer refused to pay a personal accident claim. The FOS instructed it to do so. There was medical evidence that suggested the surgeon had negligently torn or cut the artery during the surgery. This was an accident: it was not a natural consequence of the risks inherent in surgery.

Unreasonably literal interpretations

Where one of the injuries specified under a personal accident insurance policy is suffered, disputes can arise as to whether the exact wording of the policy has been satisfied.

The FOS gives in Ombudsman News 1 the example of a family which was involved in a car accident whilst on holiday in Florida. Unfortunately the policyholder suffered the loss of all useful sight in one eye. Her travel insurance included personal accident cover, which had a sum insured of £25,000 in respect of “total and irrecoverable loss of all sight in one or both eyes”. The insurer obtained its own medical report, which identified that the policyholder retained a small percentage of peripheral vision – estimated at 2-3% of normal. On this basis the insurer rejected the claim, since there was not a total loss of all sight in the eye.

When the case was referred to the FOS the insurer offered an ex gratia payment of £12,500, half the sum insured. The FOS decided that the policyholder had, for all practical purposes, suffered a total loss of all sight in one eye. It instructed the insurer to settle the claim in full, with interest. This was hardly a surprising result, since the insurer's own medical expert had commented: “In theory, [the policyholder] had retained sight in the left eye. However, it was so minimal, it [would] be of no practical use to her. For practical purposes, [the policyholder] had lost all sight with the left eye.”