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Case Review: Insurance
Summary of some of the decisions made by the Mediators on some of the complaints received by FMB.
This summary is for information only and should not be used for other purpose.
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FMB/GI 0072 - Ambiguity in Proposal Form
Madam G purchased a senior citizen personal accident policy on 10.10.2002. She indicated in the proposal form that she wanted protection for herself and her husband. The proposal form was duly signed by Madam G. The insurers issued a policy covering both Madam G and her husband. In February 2003 Madam G's husband had an accident which rendered him permanently disabled. Madam G submitted a claim for permanent disability benefit which was declined by the insurers on the ground of non-disclosure of pre-existing medical condition. According to the medical report Madam G's husband had history of heart disease and diabetes and these facts were not disclosed in the proposal form.
Madam G contended that the proposal form was only signed by her and not her husband and the declaration therein was her declaration and not that of her husband.
The Mediator observed that a proposal form for a policy which provides coverage for the insured and his/her family would contain separate health declaration for the insured, the spouse and the children. Where there is only one declaration, it is normally worded as follows: "I/We am/are in good health…". Thus it is clear that the declaration applies to all persons to be covered under the policy.
In the matter under reference the proposal form contained only one declaration which is worded as follows: "I am in good health…". There was no indication at all that the declaration was to apply to all persons to be covered under the policy. The word 'I' was used in the declaration and it required the signature of 'insured person'. Being an insured herself Madam G may rightly assume that the declaration was on her state of health and not that of her husband. Since the declaration was signed by Madam G, it was her declaration and not that of her husband.
The Mediator found that there was an ambiguity in the proposal form and by virtue of the contra proferentum rule the ambiguity is to be resolved against the insurers. Accordingly the Mediator held the insurers liable to settle the claim.
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