Can I Claim for Extra Expenses in Obtaining Insurance Coverage Following My Injury?

Ray Lee, ONC Lawyers

Introduction

The premium payable for different people for the same insurance coverage can vary significantly. It is no secret that life insurance is calculated by complex formulas taking a variety of the insured’s personal circumstances into account. In the case of personal injury victims, it is possible that their insurance premiums will be increased due to medical problems resulting from their sustained injuries. In extreme cases, their insurance coverage application may even be rejected.

This article aims to discuss the extent that a personal injury victim may be able to claim extra premium spent on insurance products after he/she sustains the injury. As we have yet to see any Hong Kong Court decisions on this point, this article examines the UK’s approach to assessing these types of claims.

UK Authority on Claiming Extra Premium Spent

In A v The National Blood Authority [2001] 3 All ER 289, the Claimants initiated a class action lawsuit against The National Blood Authority to recover damages incurred as a result of being infected with Hepatitis C after receiving contaminated blood transfusions. The UK Court found in favour of the Claimants, deciding that the blood products were defective within the meaning of Consumer Protection Act 1987. Upon establishing liability, the UK Court assessed the damages to be awarded to each Claimant.

One of the Claimants, Ms. V, sought damages for two types of insurance handicap. The first type was life assurance by way of mortgage protection. It was submitted that she and her partner had obtained a life cover for their house in late 1998. Upon the infection, the premium increased from £11.61 per month to £24.53 per month and the extra Premium amounted to £284.24 (the “Extra Premium”). It was further submitted that she and her partner had recently remortgaged their house and the new premium was £30.12 per month (an increase of £216.96 annually). Therefore, Ms. V claimed the Extra Premium and a future loss of £216.96 per annum at an agreed multiplier of 17.19 (ie, £3,729.54) (the “Future Premium”).

The second type of insurance handicap claimed by Ms. V was the refusal of critical illness coverage and a possible handicap in respect of obtaining permanent health insurance and/or employee benefits. It was submitted that Ms. V had sought a critical illness cover but was refused. Such claim was also supported by an insurance industry expert. Ms. V thereby claimed £3,000 in relation to this insurance handicap.

Decisions of the UK Court

As in any personal injury claim, the loss suffered by the claimant cannot be too remote. In this connection, the Court laid down the following three principles:

  • the claim shall identify a specific area of additional expense or loss resulting from the unavailability or more restricted availability;
  • there must be evidence to show that the product would be sought and obtained by the claimant;
  • there must be evidence that such products sought by the claimant were not available or were available at a disadvantage to the claimant.

In the case of Ms. V, the Extra Premium claim was not disputed by the Defendant – Ms. V had already taken out the life cover and the facts showed that but for her condition, her premium would not have increased.

However, the Defendant disputed the Future Premium claim. Relying on a joint expert report, the Defendant alleged that Ms. V should be able to obtain other insurance coverage at a lower premium. Further, there was a chance of her cure in the future and a review upon her cure would likely result in better underwriting terms. The Court considered both parties’ submissions and awarded a figure of £2000.

In relation to the critical illness coverage and possible permanent health insurance and/or employee benefit handicap, the Court found the employee benefit handicap to be entirely hypothetical and not supported by evidence. The permanent health insurance claim was also rejected by the Court as there was no indication that Ms. V was considering or able to afford permanent health insurance. Even though the critical illness coverage was in the realm of hypothetical, Ms. V did seek such cover but was rejected. In the circumstances, a sum of £1,000 was awarded solely for loss in the critical illness coverage.

Implications

The UK Court’s decision in The National Blood Authority confirms that a claim in insurance handicap is recognised in law. As usual, potential personal injury Claimants who wish to claim damages always bear the burden to prove their loss. The three principles set forth in The National Blood Authority serve as a good starting point to assess whether a claim in insurance handicap is likely to succeed.

It is also worth noting that bare assertions that a number of unsuccessful attempts were made by claimants to obtain insurance may not suffice. Since most insurance is taken out voluntarily, the Court might be slow to accept there is a genuine loss without concrete proof.

However, claimants who have insurance before being injured should easily be able to meet this burden by showing the increase in their insurance premium. As we have yet to see any Hong Kong Court decisions on this point, it is uncertain whether the Court will accept this type of claim and if so, how this claim will be assessed.

Conclusion

To conclude, there is a good chance for personal injury victims to recover the extra insurance premium on showing proper documentary evidence. For claims base on a new insurance application being refused, it might not be as straight forward. From a practical point of view, claimants should be aware that time and resources will need to be spent to secure the necessary evidence to substantiate such claim. The time and resources should be weighed carefully against the sums that he/she can be awarded under this head.