CR10 Conclusion of contract – mistake


Conclusion of contract – mistake – insurance company’s error at underwriting stage – whether the insurance company should abide by their mistake and maintain the contract as originally issued.


In December 2003 Mr and Mrs A applied to X Company for a health insurance policy. Mr A’s application was accepted but with a loading. Mrs A’s policy was accepted at tabular rates without any exclusion or restrictive clause, this notwithstanding the fact that in the application form the history of Mrs A’s hip replacement, which she underwent some time in 1998, was recorded. Once the acceptance had been received, Mr and Mrs A cancelled their health insurance contract with Y Company.

X Company stated that it erred in not capturing the history of the hip replacement when Mrs A’s details were loaded into their underwriting system. When the policy was issued the medical history which featured in the application form was repeated in the contract document. X Company implied that as this did not record the history of Mrs A’s hip replacement she should have realised that something was amiss and, thus, she had been given an opportunity to correct matters. Mr and Mrs A stated that they never received the policy document which was not in fact forwarded directly to them but was allegedly forwarded to their broker.

The fact that a policy was issued in a form not intended by X Company, came to light two years later when Mrs A underwent a further hip replacement. X Company took the view that it was clearly its intention to include a hip replacement exclusion but nevertheless it agreed to admit the claim but insisted that an exclusion would apply to any further treatment relating to the conditions of the hips. Mr and Mrs A’s attitude is that X Company should abide by the original terms of acceptance and adhere to the contract as originally issued.


The complaint was upheld and the contract remained as issued without any exclusion or restrictive clause.