Family loses insurance fight as mother’s broken hip not deemed ‘primary cause of death’

Financial Services Complaints says the insurer was only obliged to pay a claim that fell within a policy’s wording. Photo / 123rf

By Susan Edmunds of RNZ

A family has lost their battle with an insurer that turned down a claim for their mother’s death because a broken hip was not the sole cause of her death.

The woman’s family complained to Financial Services Complaints, which is a scheme that deals with complaints that cannot be resolved directly between a financial services provider and its customers.

It does not identify the people who complain, nor the businesses they complain about.

In this case, the woman had an insurance policy that would cover her if she was injured or died from an accident that was the sole cause of her death.

She fell and broke her hip and was taken to hospital. But after an operation to mend her hip, she became so unwell she was unresponsive. She died 10 days after the accident.

Her death certificate recorded the cause of death as a large brain bleed, a bleed in her lungs relating to cancer and a broken hip.

Her daughter submitted an insurance claim for loss of life following the broken hip.

The insurer said because a medical expert said the primary cause of death was a brain bleed, the accident was not the sole cause.

The daughter argued if her mother had not broken her hip, she would not have needed the operation that put her body under such stress that caused the brain bleed.

Financial Services Complaints (FSCL) said its case manager could understand why the family challenged the decision to decline the claim.

“If [she] had not broken her hip, she would not have needed surgery that may well have contributed to the brain bleed that led to her death. However, the policy wording required the injury to be the sole cause of death. While the broken hip set the scene, the death certificate and the medical expert both referred to a brain bleed as the primary cause of death.”

It said the daughter should discontinue her complaint.

It said people needed to understand that insurance policies would have limitations. The insurer was only obliged to pay a claim that fell within a policy’s wording.

Tim Fairbrother, a financial adviser at Rival Wealth, said it would have been a difficult time for the family.

“Accidental death payouts are rare as I believe it only makes up 5 to 6% of life insurance claims. Unfortunately, the insurer must follow the guidelines of the policy wording, because if they deviated on every one that was not in line, then the cost of insurance for existing holders will continue to increase. And in this situation, this is what FSCL unfortunately agreed also.”