Alcoholics must disclose their condition when applying for insurance

Successful appeal by the Insurer from a decision of the trial judge finding that the estate of the deceased Insured was entitled to payment of $115,000 USD under a travel insurance policy purchased by the Insured prior to her death.  The insured was an alcoholic who did not disclose her alcoholism as a relevant health condition when she applied for the insurance.

Ouimet Estate v. Co-operators Life Insurance Co., [2007] B.C.J. No. 558, British Columbia Court of Appeal, Ryan, Huddart and Lowry JJ.A., March 20, 2007

The Insured was a 52 year-old woman who had a long-standing problem with alcohol, but had never been diagnosed as being an alcoholic. She purchased a policy of travel insurance from the Insurer prior to travelling from her home in Vancouver to Denver, USA. At the time she purchased the policy, the Insured made a declaration that she was “in good health” and knew of “no reason to seek medical attention …”.

The evidence adduced by the Insurer at trial showed that the Insured had been hospitalised the night prior to making the declaration after she had taken a prescription narcotic while in a state of a gross intoxication. The Insurer denied the Insured’s claim on the basis that she had failed to properly disclose the state of her health at the time the policy was purchased.

The trial judge found that a reasonable person would interpret the declaration made by the Insured as meaning that the Insurer was only interested in health conditions serious enough to warrant medical attention that was more than routine or non-emergency medical treatment. She therefore found that the Insured was entitled to make the declaration that she was in good health and knew of no reason to seek medical attention.

The Court of Appeal disagreed with the trial judge’s construction of the words “medical attention” and found that, on the evidence, the Insured could not properly have made the declaration of good health that she had made in order to obtain the policy. The Court of Appeal therefore concluded that the Insurer was entitled to deny the claim by the Insured’s estate. The Insurer’s appeal was allowed and the claim dismissed.

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