Insurance Payout Question

qwerty129

Hi,

My Dad died recently and he was directly employing 2 carers (he was in a wheelchair) at time of death. Legally on his death, the two carers are due statutory redundancy.

He had Carer Insurance which provides coverage as follows:

"The policy will not pay more than: £2,000 per employee or a maximum of £4,000 if more than one employee is made redundant."

However they will only pay this out after money in his 'direct payment' bank account is accounted for - essentially a bank account that the government paid into to support him directly employing carers. 

The two employees are due £8000 and £3000 respectively in redundancy and the bank account has £8400 in it. Therefore there is a shortfall of £2600.

The insurance company will only agree to pay out £2000 as it says there is enough money to cover the first employees redundancy in full. This seems like a generous way to calculate it.

Would anyone else have interpreted their terms as meaning they would pay out any shortfall of up to £4000 total for my situation? 

HampshireH

qwerty129 said:

Would anyone else have interpreted their terms as meaning they would pay out any shortfall of up to £4000 total for my situation? 

That is certainly how what you have quoted reads yes. Was there any exclusions attached to the policy 

MattMattMattUK

qwerty129 said:

Hi,

My Dad died recently and he was directly employing 2 carers (he was in a wheelchair) at time of death. Legally on his death, the two carers are due statutory redundancy.

He had Carer Insurance which provides coverage as follows:

"The policy will not pay more than: £2,000 per employee or a maximum of £4,000 if more than one employee is made redundant."

However they will only pay this out after money in his 'direct payment' bank account is accounted for - essentially a bank account that the government paid into to support him directly employing carers. 

The two employees are due £8000 and £3000 respectively in redundancy and the bank account has £8400 in it. Therefore there is a shortfall of £2600.

The insurance company will only agree to pay out £2000 as it says there is enough money to cover the first employees redundancy in full. This seems like a generous way to calculate it.

Would anyone else have interpreted their terms as meaning they would pay out any shortfall of up to £4000 total for my situation? 

I would interpret as they would cover a shortfall up to £2,000 per employee, or £4,000 in total, but the key will be the further detail in the full policy, not the summary from the email.

BarelySentientAI

I could easily interpret it either way.

They are treating the redundancies sequentially, you are treating them simultaneously.

qwerty129

I can't post the link but the Fish Insurance Care Protect policy doc is available online.

Specific detail from the policy doc below:

4.4.2. Maximum your Insurer will pay The final amount paid will be in line with the redundancy rate as required by law. This will depend on how long someone has been employed by You. However, the policy will not pay no more than: £2,000 per Employee or a maximum of £4,000 if more than one Employee is made redundant. £450 for all cost of notice period claims.

For a legal document I am surprised they use this careless double negative language: "the policy will not pay no more than"

BarelySentientAI

They say that there are enough funds to pay employee 1, so that employee is not covered based on 4.4.4.  There are not enough funds to pay employee 2, so the policy triggers.  It is a single employee claim, so the limit is £2000 for that employee.

You say that there are not enough funds to pay both employees, so 4.4.4 does not apply.  Then it is a claim for more than one employee, so it covers up to £4000 between them.

I think either view could be supported, and I don't find anything in the wording that clarifies.  I'd then expect them to fall on your side of the fence in the event of a dispute.

qwerty129

BarelySentientAI said:

They say that there are enough funds to pay employee 1, so that employee is not covered based on 4.4.4.  There are not enough funds to pay employee 2, so the policy triggers.  It is a single employee claim, so the limit is £2000 for that employee.

You say that there are not enough funds to pay both employees, so 4.4.4 does not apply.  Then it is a claim for more than one employee, so it covers up to £4000 between them.

I think either view could be supported, and I don't find anything in the wording that clarifies.  I'd then expect them to fall on your side of the fence in the event of a dispute.

Thank you for the very succinct summary. I agree it could be argued either way and the doc doesn't specify one way or the other. I do feel like the view they are taking is both generous to them and not the way most people would interpret this wording - but then I am not objective.

BarelySentientAI

qwerty129 said:

BarelySentientAI said:

They say that there are enough funds to pay employee 1, so that employee is not covered based on 4.4.4.  There are not enough funds to pay employee 2, so the policy triggers.  It is a single employee claim, so the limit is £2000 for that employee.

You say that there are not enough funds to pay both employees, so 4.4.4 does not apply.  Then it is a claim for more than one employee, so it covers up to £4000 between them.

I think either view could be supported, and I don't find anything in the wording that clarifies.  I'd then expect them to fall on your side of the fence in the event of a dispute.

Thank you for the very succinct summary. I agree it could be argued either way and the doc doesn't specify one way or the other. I do feel like the view they are taking is both generous to them and not the way most people would interpret this wording - but then I am not objective.

That's an important comment though.  If a term is unclear in a contract and isn't specifically defined, benefit should be given to the interpretation of a layperson and/or the party that didn't write the contract.

@DullGreyGuy is usually pretty good at interpreting wording.

DullGreyGuy

https://www.fishinsurance.co.uk/app/uploads/2020/07/Healthcare-Protect-Policy-Wording_04.2020.pdf

Not really much more to add, I dont think the wording strongly supports their proposed interpretation and as others have already mentioned when it comes to the Ombudsman they will accept a policyholders interpretation if its a reasonable one even if its not what the insurer had intended. There is a short fall of £2,600 and with two employees the policy is capped at £4,000 and so the £2,600 should be paid in full.

Presumably there is no disputes on the £450 notice payment?

qwerty129

BarelySentientAI said:

Thank you BarelySentientAI and DullGreyGuy. I am not eligible for the notice payment as notice is not payable in this situation.

However my looking into this has raised another legal question with me. As you will see above in 4.4.4 it mentions that funds in the direct payment account at point of redundancy will be used when calculating the insurance payout.

I have been told that their employment ended and they became legally redundant on the date of his death. The direct payment bank account actually had £5,900 in it on the date of his death. An additional £2,500 was paid into the account 5 days later by the council.

Does anyone know what the legal definition of point of redundancy is?  Fish have included the £2,500 deposited 5 days after the employees were made redundant in their calculations - but should they have? Perhaps I have to repay this extra payment to the council - but either way I am now wondering whether Fish erred in including it.

BarelySentientAI

qwerty129 said:

BarelySentientAI said:

Thank you BarelySentientAI and DullGreyGuy. I am not eligible for the notice payment as notice is not payable in this situation.

However my looking into this has raised another legal question with me. As you will see above in 4.4.4 it mentions that funds in the direct payment account at point of redundancy will be used when calculating the insurance payout.

I have been told that their employment ended and they became legally redundant on the date of his death. The direct payment bank account actually had £5,900 in it on the date of his death. An additional £2,500 was paid into the account 5 days later by the council.

Does anyone know what the legal definition of point of redundancy is?  Fish have included the £2,500 deposited 5 days after the employees were made redundant in their calculations - but should they have? Perhaps I have to repay this extra payment to the council - but either way I am now wondering whether Fish erred in including it.

Not in bold, so it's not a definition in the policy.  That usually means it's whatever the commonly accepted definition would be.