CR262

Funeral policy – covering “eligible children” as defined – interpretation – insurer liable, for interest as well.

BACKGROUND
The complainant was the holder of a funeral policy in respect of which benefits were payable in the event of the death inter alia of children named in the policy. One such named child was G, born in 2001, who was not the complainant’s natural child but that of her sister. The complainant’s sister, and the child’s natural father, had both died and in terms of their culture the complainant had taken over and cared for the child as her own. By the time that the policy was later taken out the child had already been living with her under this arrangement, and remained in her care and dependent on her until the child’s death in September 2007.

When a claim in respect of the child’s death was lodged by the complainant, the insurer discovered that she had not been her natural child. It declined the claim contending that the complainant had failed to prove that she had been appointed by the court to be the child’s guardian.

DISCUSSION

On its wording the policy provided cover for what it called “eligible children”, who were defined as follows:

“Eligible Children” means any natural children, lawfully adopted children, step children by marriage, illegitimate children, foster children who have in terms of the provisions of any legislation relative to the protection of children been placed in Your custody as foster children, still-born children following 26 weeks of pregnancy or any children who are living with You in the same household in a relationship which is not casual or impermanent and as if they were Your lawful children from the ages 0 months to 21 years… who are unmarried and who permanently reside with You, both at the time of inception of the Policy and at the Date of Loss and who are financially dependent upon You.”

The office pointed out that on this definition the claim should be paid, because:

“In her application dated 9 May 2006 the complainant nominated G as a child dependent. In terms of the definition of “eligible children” in the policy, G qualifies as an eligible child, in that she was a child who was living with the policyholder in the same household in a relationship which was not casual or impermanent and as if she were her lawful child. The child was almost five years old at the time of application for the policy, and therefore qualified in terms of the requirement that the child be aged between nought and twenty-one years. The child was obviously unmarried, and permanently resided with the policyholder both at the time of inception of the policy and at the date of her death. The child was financially dependent upon the policy holder.”

By letter dated 8 February 2008 the insurer conceded that the child had indeed been covered by the definition, and that it should have paid the claim. It nevertheless refused to pay interest for late payment of the claim because, so it contended, the complainant had not furnished information during the lifetime of the child that she had qualified as an eligible child as defined. The office responded by pointing out, firstly that the complainant had borne no obligation, either in terms of the policy or at all, to have furnished any such information at that stage, and that it was only at claim stage that the complainant had to prove that the child had been an eligible child, and secondly that the proof thereof had in fact been furnished with the claim when it was lodged.

CONCLUSION

The insurer paid the claim, together with interest thereon in terms of the LOA Circular 86/2003.

SM
January 2009