BUSE2008A

Insurance and Risk Management IIB

Block III

Personal Accidents
Lecturer: Mr Gift Nemukula
Gift.Nemukula@wits.ac.za
Personal Accident Insurance: Historical Development
After the marine, fire and life markets were established the need for insurance to cover injuries caused during
events such as railway accidents, workers’ being injured at work, motor vehicle accidents. This gave rise to
the accident market with its associated accident policies including, worker’s compensation, personal accident,
employer’s liability and general liability began to develop.

Operative clause

The typical operative clause of a personal accident policy covers the following defined events:
 Bodily injury caused by accidental, violent, external and visible means to any principal, partner, director or
employee of the insured (hereinafter in this section referred to as such person) specified in the schedule.
 The company will pay to the insured, on behalf of such person or his estate, the compensation stated in the
schedule in the event of accidental bodily injury to any such person directly and independently of all other
causes resulting within twenty-four calendar months in death or disability as specified in the schedule under
the heading circumstances.
Personal Accident Insurance
Operative clause
The purpose of personal accident insurance is to secure to the assured or his representatives the
payment of a sum of money in the event of his death or disablement by accident. It is not a contract of
indemnity.
The words in the operative clause have been subject to much judicial analysis.
bodily injury...
Bodily injury is injury to the body, for example the fracturing of a leg, or skull or finger. The injury,
however, need not be accompanied by an outward and visible signs. Thus death by drowning,
suffocation, by smoke or gas is bodily injury.
Personal Accident Insurance
Operative clause
accidental ... means...
The word accident is used in various circumstances such as with worker’s compensation, public liability, motor,
employer’s liability and personal accident policies.

The word must be interpreted in the context that the word is used. In a Scottish case Clidero v Scottish Accident
Insurance Company 1892 19 R Ct of Sess 355 29 LR 303 (Clidero v Scottish Accident Insurance Company, 1892)
a fairly stout man got out of bed and put on his stockings.
In doing so his colon slipped and became extended, placing some pressure on his heart that he died a few days later.
The court ruled that he had not died by accidental means.

In the American case, Landress v Phoenix Insurance Company 219 VS 491 1933 (Landress v Phoenix Insurance
Company, 1933) the majority of the court held that death by sunstroke after the deceased had suntanned himself was
not death by accidental means.
Personal Accident Insurance
Operative clause
accidental ... means...
In Hamlyn v Crown Accident Insurance Co Ltd 1893 1 QB 750 (Hamlyn v Crown Accident Insurance Co
Ltd, 1839) the court decided that the assured who wrenched his knee dislocating the cartilage of the knee
joint when he stooped to pick up a marble had suffered an injury as a result of a violent, accidental, external
and visible means. It is difficult to reconcile this decision with the actual words of the operative clause.
In Griessel NO v SA Myn en Algemene Assuransie Edms Bpk 1952 4 SA 473 T (Griessel NO v SA Myn en
Algemene Assuransie Edms Bpk, 1952), the insured unsuccessfully proposed to a passenger while driving
a motor car. When she replied that she was not going to ruin her life by marrying the insured he commenced
to swerve the car from left to right causing the car to crash into a tree. The insured and a number of
passengers were killed. The court held that the onus was to convince the court that on the balance of
probabilities the assured had died of an accident and not his own conscious intention to kill or maim himself
and that the plaintiff had failed to do so. Further the evidence showed that the accident had been caused
directly or indirectly to intoxicating liquor, an exclusion to the policy.
Personal Accident Insurance
accidental ... means...
In Agiakatsukas NO v Rotterdam Insurance Co Ltd 1959 4 SA 726 (Agiakatsukas NO v Rotterdam
Insurance Co Ltd, 1959) the insured was killed as a result of his driving his car into the back of a stationary
lorry. It was suggested that the deceased was intoxicated at the time of the accident. The insurer argued the
onus was on the insured to show that he died from violent external and visible means and if intoxicated, then
this was the proximate cause of the accident. This was a convoluted argument. The court ruled that the onus
was on the insured to show that the deceased died from ‘violent external and visible means’ and on the facts,
this was proven. To avoid liability in terms of two terms in the policy involving intoxication, the onus shifted to
the insurer. The insurer could not discharge this onus and the court found accordingly for the insured.
In Sikweyiya v Aegis Insurance Company Limited 1995 4 SA 143 ECD (Sikweyiya v Aegis Insurance
Company Limited, 1995) it was held that a man who died as a result of being stabbed in the back,
murdered, had died as a result of accidental means. It is difficult to accept that the word accidental retains its
normal every day meaning under these circumstances. If a person is murdered, very few people would regard
his death as accidental.
Personal Accident Insurance
Operative clause
accidental ... means...
In Aegis Insurance Company Ltd v Consani NO 1996 4 SA 1 A (Aegis Insurance Company Ltd v Consani
NO, 1996), James Verhoef died as a result of a rifle wound to his head. In terms of a personal accident policy
the insurer undertook to pay R1m to his estate if he suffered bodily injury caused by accidental, violent
external and visible means - the usual personal accident operative clause. From the circumstances of his death
it was not clear whether or not he had committed suicide and the insurer repudiated the claim. The onus is on
the claimant to prove that the death was accidental and the claimant could not discharge the onus and
accordingly judgment was given for the insurer. The fact that the policy contains a suicide exclusion does not
mean that if suicide is suspected that the onus shifts to the insurer to prove the suicide. The onus remains on
the claimant to prove that the death was accidental.
Personal Accident Insurance
Operative clause
Independently of all other causes ...

In Concorde Insurance Co Ltd v Oelofsen NO 1992 4 SA 669 A (Concorde Insurance Co Ltd v

Oelofsen NO, 1992) Pieter Oelofsen suffered a fatal heart attack within hours of being involved in a
motor car accident. Before the accident Oelofsen had a pre-existing serious heart condition. It was
argued for the insurer that because of this condition he did not die from independently of all other
causes. The court held that the proximate cause of Oelofsen’s death was the accident. There were no
other contributory causes and hence the phrase ‘independently of other causes’ did not assist the
insurer.
Personal Accident Insurance
Measure of compensation

Once the event falls within the operative clause, the question of the appropriate compensation arises.
This usually depends on the extent of the injury along the following progression:

Compensation dependent on the extent of injuries

 Death

 Permanent total disability

 Permanent partial disability

 Temporary total disability

 Temporary partial disability

Personal Accident Insurance
Medical expenses

Medical expenses are associated with accidents and the personal accident policy can cover medical
expenses. The personal accident policy is not an indemnity policy but pays a defined amount.

 Permanent disability

In the case of permanent disability, the compensation is determined by the continental scale as
indicated in the text box.

 Temporary total disability

Temporary total disability shall mean total and absolute incapacity from following usual business or
occupation.
Personal Accident Insurance
Operative clause

The typical operative clause for medical expenses reads as follows:

Medical expenses shall mean all costs and expenses necessarily incurred for artificial aids, prostheses,
medical, surgical, dental, nursing home or hospital treatment (including costs and expenses incurred in
emergency transportation or freeing such person if trapped or bringing such person to a place of safety)
as a result of bodily injury and incurred within 24 months of the defined event.
Life support machinery Notwithstanding anything contained in the defined events, the twenty-four month
period stated therein shall not include any period or periods where the death of such person is delayed
solely by the use, for a period or periods of not less than three consecutive days, of life support machinery,
equipment or apparatus.

As noted, the personal accident policy is a non-indemnity insurance the same cannot be said of the
medical expenses section of the policy. This section is indemnity insurance.
Personal Accident Insurance
Operative clause

The typical operative clause for medical expenses reads as follows:

Medical expenses shall mean all costs and expenses necessarily incurred for artificial aids, prostheses,
medical, surgical, dental, nursing home or hospital treatment (including costs and expenses incurred in emergency
transportation or freeing such person if trapped or bringing such person to a place of safety) as a result of bodily
injury and incurred within 24 months of the defined event.

Life support machinery

Notwithstanding anything contained in the defined events, the twenty-four month period stated therein shall
not include any period or periods where the death of such person is delayed solely by the use, for a period
or periods of not less than three consecutive days, of life support machinery, equipment or apparatus.
As noted, the personal accident policy is a non-indemnity insurance the same cannot be said of the medical expenses
section of the policy. This section is indemnity insurance.
Personal Accident Insurance
Exclusions

The policy contains a number of exclusions. The following are typical:

The company shall not be liable to pay compensation for death, disability or medical expenses in respect
of such person
(a) while he is travelling by air other than as a passenger and not as a member of the crew nor for the
purpose of any trade or technical operation therein or thereon;
(b) by his suicide or intentional self injury;
(c) caused solely by an existing physical defect or other infirmity of such person;
(d) as a result of the influence of alcohol, drugs or narcotics upon such person unless administered by a
member of the medical profession (other than himself) or unless prescribed by and taken in
accordance with the instructions of a member of the medical profession (other than himself);
Personal Accident Insurance
Exclusions

The policy contains a number of exclusions. The following are typical:

The company shall not be liable to pay compensation for death, disability or medical expenses in respect
of such person
e) while he is or as a result of his engaging in motor cycling (whether as driver or passenger) other than on
the business of the insured, mountaineering necessitating the use of ropes, winter sports involving snow
or ice, polo on horseback, steeplechasing, professional football, hang gliding or racing of any kind
involving the use of any power driven vehicle, vessel, craft;

f) as a result of his participation in any riot or civil commotion;

g) in the case of females, directly or indirectly resulting from or prolonged or accelerated by or attributable
to pregnancy, childbirth, abortion, miscarriage, obstetrical procedures or any sequelae thereof.
Personal Accident Insurance
Exclusions

Exclusions in policies for perceived high risk activities are well known. In Barnard v Protea Assurance Co
Ltd 1998 3 SA 1063 C (Barnard v Protea Assurance Co Ltd, 1998), involved the payment of an
accident benefit (which contains exclusions similar to those of the personal accident policy) in a life
insurance contract. The contract excluded ‘active participation in ... skin-diving.’ Barnard died while
undergoing scuba diving training. He had disclosed in the proposal form that he was an amateur scuba
diver. The insurer repudiated the claim in terms of the skin-diving exclusion. The court held that the
exclusion did not apply and the insurer was liable in terms of the contract.