Does Your Insurance Cover What You Want It to Cover?
There is no point taking out insurance policies that do not meet your needs and it is well worth taking professional advice to ensure that they are tailored to you. The issue was highlighted by one case concerning two brothers who were in business together and insured each other against death or critical illness.
After one brother fell ill and was unable to work in their construction business, the other was paid £250,000 by insurers and kept the money. The former launched proceedings, claiming that the latter had thus been unjustly enriched. He argued that he should have received the money as he was the one who was critically ill.
He pointed to an agreement between them to the effect that, if one of them received an insurance payment in respect of the other’s inability to work, the sick brother would have the option to sell his shares in the business to his fit sibling in return for the insurance money.
Ruling that the fit brother was entitled to retain the cash, however, a judge rejected arguments that he had received a windfall. The business had ceased trading and there had been an unambiguous agreement between them that the sale option would in those circumstances lapse. The sick brother was ordered to pay the legal costs of the case, estimated at £40,000.