Understanding Accident Insurance by Alison Burrison,

Insurance can be a great tool to protect you and your loved ones. It can also provide peace of mind knowing that you won’t be faced with unexpected financial obligations following an accident. However, accident insurance contracts can be complex and securing the appropriate coverage for you and your family may not be straight forward. This article will identify some common pitfalls consumers encounter, and provide strategies to ensure you get coverage that satisfies your needs.

An insurance policy is a legal contract between an insurer (the insurance company providing coverage) and an insured (the person covered under the contract). The insured pays premiums to the insurer, who in turn provides coverage to the insured in accordance with the terms of an insurance policy.

There are two important parts of a policy that you should pay careful attention to:

1) Conditions, and

2) Exclusions.

A policy condition is effectively a requirement that the insured must fulfill in order to maintain the insurance coverage sought. If a condition in a policy is breached, the policy may become void, or the insurer may choose to deny a claim on the basis of the breach. Some conditions may be expressly set out in the insurance contract, while others are statutorily imposed by legislation. For example, the Insurance Act requires that no-fault benefits contained in the Statutory Accident Benefits Schedule form part of every automobile insurance policy in Ontario.

Adhering to policy conditions also requires the full and accurate disclosure of all information requested by the insurer at the time you purchase the policy. Misstating or excluding important information, or neglecting to inform the insurer of changes to this information, may result in denial of a claim or termination of an insurance policy. For example, it may be convenient to omit a pre-existing heart condition to a potential insurer, or inform the insurer about the development of such a condition. You may even pay lower monthly premiums as a result. However, a breach of the requirement to deal with your insurer in good faith will almost certainly result in a denial of a claim or, at the very least, a reduction in compensation when you make a claim.

Policy exclusions are provisions that eliminate coverage in specified circumstances. Exclusions serve as a way to clarify the coverage granted by the policy. While most insurance policies contain a section titled “exclusions”, an exclusionary provision can appear anywhere in a policy. When reviewing a policy, pay close attention to any exclusionary provisions and be sure they do not affect the coverage you seek.

The following example illustrates how an exclusion may work against you.

An accident insurance policy states: “This policy will pay up to $50,000 in compensation for the loss of vision in one eye…” The policy goes on to state that “loss of vision in one eye” is constituted by “a corrected visual acuity of less than 20/200.”

At first blush, this provision may appear unambiguous. If your daughter, who is covered under the policy, sustains an eye injury that results in visual acuity equal to 20/200 vision, or worse, she is entitled to up to $50,000 in compensation. Right?

Not necessarily. For example, a young Vancouver girl was struck in the face with a soccer ball during the course of a soccer game.[1] She was covered under the terms of an accident insurance policy purchased by her mother. Although doctors were able to reattach the young girl’s retina, her vision remained poor. In fact, her vision after the accident was less than 20/200.

The accident insurance policy purchased by her mother contained a provision similar to the example above. However, when she submitted a claim following her daughter’s injury, the insurer advised that her daughter’s injury was not compensable pursuant to the terms of the policy. It turned out that child’s vision while wearing corrective lenses was better than 20/200 and, therefore, she was excluded from making any claim for her injury. The policy did not explicitly contemplate whether her daughter’s post-injury vision would be measured with or without corrective lenses. The child did not require glasses before her accident; why would her impairment after the accident be measured while wearing glasses?

In order to avoid a similar denial, you may ask a broker or other representative of an insurer for clarification of any words or terms contained in a policy that are vague, ambiguous or otherwise unclear and undefined by the policy. Typically, an insurer will not change their standard form policy at the request of a potential insured. However, understanding the terms of a policy will help you identify an insurer that offers coverage in line with your coverage priorities.

It is important to note that an insurance policy is to be read and construed in its entirety. You must read and understand the entire document in order to fully appreciate your rights and obligations under the policy. You can consult a lawyer in order to facilitate your understanding of the policy and ensure you are sufficiently covered.

When reviewing a policy, the following steps may help minimize the risk of having a future claim denied and ensure you get the protection you need:

First, identify the nature and scope of coverage you are seeking. This will help you determine whether your policy will cover against specific losses.
Read the policy and ask yourself:
- Does the insuring policy cover each claim I foresee myself making?
- Is there any exclusion or other provision that eliminates or restricts coverage?
  - Are there any exclusion exceptions that restore coverage?
- What policy conditions must I comply with?
- Does the policy contemplate coverage for my spouse or children?
- What are the policy limits, and are these sufficient for my purposes?

Accident insurance policies are inherently complicated, and when the health and safety of your loved ones is involved, the stakes can be high. You should consult a lawyer if you are unsure about the coverage you are receiving under the terms of an existing accident insurance policy, or if you are unsure about which type of policy you need.

[1] http://www.cbc.ca/news/canada/british-columbia/insurance-company-refuses-claim-for-severe-eye-injury-1.3834953

ALISON BURRISON
Partner, McLeish Orlando Critical Injury Lawyers

Alison has appeared in all levels of court in Ontario, as well as administrative tribunals on behalf of her clients. She has also represented clients at multiple mediations involving complex matters of liability and damages.