Supreme Court orders insurer to pay death benefit for accident during policy term

The Supreme Court ordered an insurance company to pay a traffic accident death benefit even though the insured person died after the policy period expired, provided the accident itself occurred while the coverage was active.

The court found the standard contract clause stating benefits apply when an insured dies due to a traffic accident during the policy term was objectively ambiguous. While one reading could require both the accident and death to occur within the timeframe, the court noted that limiting the modifier 'during the policy term' to just the accident is also reasonable.

Because average customers could understand the clause to mean only the accident needs to happen during the term, the ambiguity must be resolved in their favor. Under the Regulation of Terms Act, such uncertainties must be interpreted against the drafter, the court said.

The ruling centered on case number 2025Da211789, decided April 2, where a husband purchased accidental injury insurance for his wife. She was involved in a traffic crash during the coverage period but remained in a temporary disabled state until succumbing to her injuries after the policy had ended. The court determined the accident was the direct cause of death.

Consequently, the insurer is obligated to pay the benefit based on the occurrence of the traffic disaster alone, without requiring death to fall within the same window. The court noted that insurance terms must be interpreted fairly based on good faith principles and the understanding of an average customer.