Definition of 'terminal illness'

No doubt life insurers were eagerly awaiting this decision as Mr Catherwood’s interpretation of terminal illness could have had very wide-reaching implications for the industry.

The dispute between the parties turned on the words “regardless of” in the phrase “and regardless of any available treatment” that was found in the definition of the words “terminal illness” and “terminally ill” in the policy. Despite the words “regardless of” being accepted as ambiguous, as they have two different meanings, the Court of Appeal has confirmed the High Court decision and found in favour of Asteron Life.

After examining the context of the policy and the wider insurance market, the Court of Appeal confirmed that “regardless of” meant “despite” rather than “disregarding”.

If Mr Catherwood had succeeded, life insurers would have needed to reassess their wording/definition regarding terminal illness to ensure any illness that could cause death without treatment would not be captured. There are many common illnesses that may conceivably fall into this category (e.g. tetanus or diabetes).

Interestingly, the Court of Appeal rounded out its judgment by commenting on Mr Catherwood’s argument that the contra proferentem rule meant that it should rule in his favour given the accepted ambiguity. The Court of Appeal found that the Judge’s analysis meant that there was no ambiguity as to the proper interpretation. If a word has two meanings, the context needs to be considered to determine whether it is truly ambiguous.

You can read the full judgment here

RACHEL ANDERSON IS A senior associate at fee langstone