Published 01 Dec 2016
Our client, Mr O, is a resident of Tweed Heads. He had suffered an injury to his dominant right shoulder, which caused him the inability to work. He attempted to claim upon his income protection policy which had a payment period of up to 5 years replacing his salary of approximately $70,000.00 per annum. However his income protection insurer refused to respond on the basis of an exclusion to the cervical spine and its support musculature which was placed on the policy since it was first taken out, due to Mr O’s history of earlier injury to the neck.
The insurer excluded the claim by interpreting the injury to Mr O’s shoulder was predominantly at the rhomboid minor muscle which originates at the 7th cervical and 1st thoracic vertebrae. The insurer suggested that the injury by its connection to the cervical spine was part of the surrounding musculature and therefore excluded. This is notwithstanding the medical evidence demonstrating that the injury was to a part of the muscle not close to the spine nor caused by any defect of the spine.
Mr O attempted to submit various medical evidence to persuade the insurer but to no avail, and he was at his wit’s end when he sought the assistance of Gerard Malouf & Partners. Our firm, upon being retained, quickly advised Mr O that the case involves complicated legal interpretation and requires applying various case law of contractual interpretation and the principle known as contra proferentem. This principle essentially means that any ambiguity in the contract is essentially the fault of the party that wrote the contract and accordingly has to read in its narrowest terms and not the broadest.
We advised that the only remedy was to commence proceedings at the Supreme Court against the insurer, which was duly actioned. Mr O’s case was arguable but there was inherent risks for both Mr O and to the insurer. However, the threat of proceedings persuaded the insurer to approach us for negotiations to settle Mr O’s case, which was resolved in exchange for $200,000.00 as a capital sum, thus representing a significant percentage of the total amount recoverable under the policy. Mr O was greatly relieved and satisfied with the outcome of the settlement which afforded him the money to take care of himself during his recognisance.
Insurance contract cases are not like personal injury claims. The claims on insurance policies are not sustained by a general argument or medical evidence. While both evidence and general principles are important, it is critical that the policy definitions and exclusions where applicable, are specifically referred. Interpretation of these contracts are subject to the historic cases of commercial law and often appears to defy common language.
Our superannuation lawyers at Gerard Malouf & Partners are expert and experienced in conducting insurance contract cases and should you encounter any dispute in relation to your insurance claim or have a query, please do not hesitate to contact Gerard Malouf & Partners for assistance on (02) 9630 4122.