CR267

Interpretation – ambiguity in policy terms – interpreted contra proferentem.

BACKGROUND

In a funeral policy the complainant was covered for the event of the death inter alia of his parent. On the death of his parent the insurer repudiated liability on the grounds that it had occurred within the nine month waiting period provided for in the policy.

DISCUSSION

Clause 4.1 of the policy concerned dealt with the waiting period, stating that it would commence on the “inception date” of the policy, “or the date on which (the insured) becomes entitled to cover in terms of the policy”. In the complainant’s case the application of these two provisions gave rise to different dates, and there was nothing in the policy which indicated which date would then apply.

As to the first possibility clause 6.6 defined “inception date” to mean “…the date from which the nominated insured persons are covered in terms of this policy”, and the inception date was fixed in the complainant’s policy schedule as being 19/2/2007. An application of this provision would have covered the death of his parent despite the fact that the death occurred some nine months later. As to the second possibility, clause 4.10 of the policy provided that cover would commence following payment of the first premium and because the first premium was paid some months later the complainant would not on this provision have been covered for the insured event.

CONCLUSION

The office pointed out to the insurer that these provisions, when the facts were applied to them, were contradictory and that the policy should be interpreted contra proferentem. The insurer agreed and paid the claim.

SM
January 2009