Tom had lost consciousness and fell, resulting in a T11 compression fracture of his spine. To aid in his recovery, his attending physician recommended that he use a Thoracolumbar brace for three months.

However, his insurer rejected his reimbursement claim for the cost of the brace as the Thoracolumbar brace was considered to be an external prosthetic device, which fell under the general exclusion clause of the policy, as stated below:

‘This Supplementary Contract shall not pay any benefit arising from or accelerated by, directly or indirectly, wholly, or partly by:

3.4 Surgery and/or treatment related to plastic/ cosmetic purposes, circumcision, eye examination, glasses and refraction or surgical correction of nearsightedness (Radial Keratotomy or Lasik) and the use or acquisition of external prosthetic, external appliances or corrective devices such as artificial limbs, hearing aids, pacemakers and prescriptions thereof’.

OUR FINDINGS

The Ombudsman opined that the exclusion clause referred to devices designed to replace a lost function, while the Thoracolumbar brace was an integral part of the treatment plan, not a replacement device.

Applying the legal maxim ‘noscitur a sociis’, OFS emphasised that the term ‘external appliances’ should be understood in the context of replacing a lost function. Insurance policies should be interpreted with sound commercial principles and good business sense, citing the precedent in Syarikat Uniweld Trading v The Asia Insurance Co Ltd (1996) 2 MLJ 1600.

In other words, insurers should not use narrow and overly literal interpretations of insurance policies as an excuse to avoid covering the main risk. This means insurers should prioritise their customers’ interests and ensure they are adequately protected against potential losses.

Highlighting a case precedent, Mc Cann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579, we argued that policies must fulfil the contract’s purpose. In a personal accident policy, treatment for a covered event should be eligible for payment. The attending doctor in the present case clarified that Tom’s use of a Thoracolumbar brace was to support the healing process of the injured spine. Tom, a layperson, should not be penalised for this as he did not make this decision to opt for the use of a Thoracolumbar brace.

OUTCOME

Considering all the above reasons, the Ombudsman decided the case in favour of Tom, citing that it was fair and reasonable for the insurer to cover the cost of the Thoracolumbar brace.