The Estate of the Deceased Insured was awarded the cost of medical expenses paid following treatment at a hospital pursuant to a travel insurance policy issued by the Defendant. The condition precedent that the Insured was in good health applied despite the fact she had an alcohol abuse problem and had overdosed on alcohol and Dilaudid the day before signing the Declaration. The exclusion clause did not apply because there was no evidence her alcohol abuse problem affected her at the time of, or contributed to, the loss.

Oimet Estate v. Co-operators Life Insurance Co., [2006] B.C.J. No. 1221, British Columbia Supreme Court

This was an action commenced by the Estate of the Deceased Insured, Ms. Ouiment, to recover expenses paid to a hospital for treatment pursuant to a travel insurance policy purchased from the Defendant, Co-operators Life Insurance (“Co-operators”). When the Insured died of sepsis in Denver, Colorado, Co-operators denied her Estate coverage, relying on a condition precedent, and an exclusion clause in the policy. The condition precedent was that at the time of the application, the Insured was of good health and knew of no reason to seek medical attention. The exclusion clause provided that benefits were not payable if evidence supported that the Insured was affected by, or the medical condition causing the loss, was in any way contributed to by the use of prohibited drugs, alcohol, or any other intoxicant. Co-operators argued that the Insured had an alcohol problem that rendered her statement that she was in good health a misrepresentation. Furthermore, the Insured had collapsed and was admitted to hospital with respiratory problems the day before she signed the Declaration attesting to her good health.

The Court found that the facts relied upon by Co-operators did not lead inevitably to the conclusion that the Insured misrepresented her health status. She had been told at the hospital where she had been admitted the day before signing the Declaration that she had overdosed on a combination of Dilaudid and alcohol. It was reasonable for her to conclude that it was an isolated incident that did not affect her overall health status for the purposes of the Declaration form. While it was likely that the Insured had an alcohol abuse problem, the seriousness and duration of the problem were unknown. She had never been diagnosed as an alcoholic by any physician. She also did not make a misrepresentation by omitting to disclose an alcohol problem on the Declaration form. Finally, there was no evidence that the Insured was affected by the use of prohibited drugs or any other intoxicant at the time of the loss and therefore the exclusion clause did not apply.

In the result, the Court found Co-operators liable to pay the Estate of the Insured the equivalent of US$115,000.

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