“I cannot overemphasise the importance of reading your insurance policy and understanding what you will and won’t be covered for,” says Karen. “Insurance never covers you for all things at all times, and trauma insurance is a very specific type of insurance.”
For 22 years, the Insurance & Financial Services Ombudsman Scheme has provided a free and independent service for consumers with insurance or financial services complaints.
“We deal with about 300 complaints and 3,000 complaint enquiries a year,” says Karen. “Many of the more common complaints could have been avoided if people had understood what they were signing up for.”
Trauma insurance policies, for example, specifically list the type of conditions that will be covered. They will only pay out the trauma benefit if the insured has suffered from one of those specific and listed conditions.
Last year, a man complained that the diagnosis of his kidney tumour and the surgery to remove it had been very traumatic. Therefore, he said, his insurer should pay his trauma claim. However, his tumour was found to be benign, and the trauma policy only covered life-threatening cancer, including ...“the presence of one of more malignant tumours.”
“Although the complainant’s experience was indeed traumatic, and we understand that, there was no evidence of malignancy,” says Karen. “It was outside the policy cover, so there was nothing we could do to give the complainant the outcome he wanted.”
In another 2016 complaint, a claimant suffered a heart attack, but his trauma insurance claim was declined, because the medical diagnosis did not meet the policy definition of a “heart attack”.
The diagnosis was for congestive heart failure and dilated cardiomyopathy. While the complainant’s heart was weaker, his heart attack had not caused a portion of his heart muscle to die, as was required by the policy. His condition was, therefore, outside the policy cover and the insurer was entitled to decline the claim.
“Trauma is not a general insurance to provide cover if you suffer any traumatic medical experience, or if you cannot work because of ill-health,” says Karen. “When you sign up for a policy, make sure you understand the limitations and exclusions. Don’t ever be afraid to ask questions. Establishing that understanding up front could save you from a lot of disappointment in future.”
Case studies of complaints are available on our website: www.ifso.nz