It is hardly surprising that misunderstandings occur when some insurers appear to share the view of Lewis Carroll's Humpty Dumpty that "a word means what I want it to mean." Insurance jargon is not for the uninitiated. Most insurers recognise this and devote much time and thought to the wording of their policies. But however straightforward the words in the policy may appear, lack of clarity can persist.
Insurers tend to forget that many of their most frequently used terms have a meaning in common usage that is different from the very specific meaning they intend in their policy. In such cases, unless they make their intended meaning very clear, their use of language may be misleading.
In the January 2001 issue of ombudsman news, we discussed how the term "chronic" is often misinterpreted. Our casework reveals many other examples. For example, most policyholders will be familiar with the word "valuables" from everyday usage. However, insurers often use the word to include items that most of us would not normally consider as valuables.
One travel policy defines "valuables" as including "photographic, audio, video and electrical equipment of any kind (including CDs, video and audio tapes), telescopes and binoculars, antiques, jewellery, watches, furs, perfumes, leather goods, animal skins, silks, precious stones and articles made of or containing gold, silver or precious metals."
Since an overall limit of £250 applies to "valuables" under this policy, the loss of - say - a few audio tapes, a leather jacket and a pair of binoculars could easily go well beyond the policy limit.
Motor insurers, too, sometimes fail to make it clear what is covered. We receive far too many complaints from people - usually young people - who have been caught driving without insurance. Almost invariably these are not reckless people who have chosen not to take out insurance. Typically, they are responsible individuals who mistakenly believed their policy covered them for driving other cars because of the policy wording "you are covered if your policy schedule includes this risk". The policy schedule will be silent unless the risk is included, but many people fail to understand the significance of the omission. They ask why the exclusion was not made clearer. The insurers' response is "We do not have to state that the risk is excluded - it just was not included".
As we have noted, most of these complainants are young. Insurers know very well that young people drive one another's cars. That is why cover for driving other cars is included for most drivers - other than young ones. Insurers are, of course, legally correct in saying they are not obliged to state everything a policy does not cover. However, it seems to us that where a particular situation regularly causes problems, it would be in the best interests of motorists, insurers and the general public if insurers made the correct position abundantly clear.
As a general rule, motor insurers are highly sceptical when drivers wish to include their children on their policies as named drivers. Sometimes the aim may be to obtain insurance for young drivers at a lower premium than the young drivers could obtain themselves. However, many parents simply wish to allow the newly qualified driver to use the family car occasionally.
We have upheld a number of complaints despite insurers' allegations that the proposers deliberately misrepresented their position. Instead of asking a prospective policyholder who the main car user will be, some insurers simply ask "Do you have access to another car-" This question is less clear than it might appear. What does "access" mean- If someone drives his mother's car once a year, does he have access to that car- Does it make any difference if she lives nearby-
If insurers require information about the number of cars in the family, they should ask that very simple question. The ABI Statement requires insurers to ask "clear questions" about "matters generally found to be material" and this seems the simplest solution to an increasingly common problem. Setting traps for unwary proposers does not help anyone.
The layout of policies, too, can be a source of confusion. In many policies the exclusions are printed on different pages from the paragraphs they modify. This can mean policyholders are unaware of relevant exclusions until their claims are rejected. In our experience, many complaints would be avoided if, for example, exclusions from theft cover were printed next to the paragraph setting out what the insurer will pay for.
When we consider cases we will look first to the common usage meaning of words. Unless insurers bring exceptions clearly to policyholders' attention, they will find it difficult to argue cases which rely on a specific definition which would not be generally recognised by policyholders. Insurers should call a spade a spade.
ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.