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Insurance Linguistics

I have been asked by several pilots and engineers whether the insurance policy they purchased in the past would cover them if they now work in a war zone or conflict area. While it may seem logical that it would not, the right answer may surprise you – it did me.

I had an opportunity to discuss this topic with Pascal Leidekker, an independent life insurance broker in the Vancouver area. He told me there are several issues he must consider before shopping for an insurance policy for one of his clients.

As I mentioned in the March/April 2009 issue of Helicopters magazine, insurance policies are complex documents. They operate on the assumption everyone is providing correct information at the time the insurance policy is written, or when the insurance policy is triggered by an event. This is called the doctrine of utmost good faith.

Generally speaking, individually owned disability and life insurance policies are underwritten based on your age (in part), health (whether you smoke or not), sex, family medical history, job description and lifestyle.

Before a life insurance company will write a policy for you, they will want to know if you engage in any dangerous activities. These activities could include things like hang gliding, mountain climbing, scuba diving – and unfortunately for many of us – flying.

Flying for a living places us in another box altogether. There is quite a difference between the premiums we pay as pilots, and those of other careers. Premium amounts will also depend on what type of flying you do. Commuter airline pilots should pay less than logging pilots under most policies.

Things can and do change in life. Insurance companies are aware of this and factor this in when they write policies. Insurance companies want to know what you are doing now and what you are planning to do in the future. Not the distant future, but what you are planning to do in the next two years or less – as best you know.

There is usually a two-year period in a life insurance policy – the contestability period – when any material changes in circumstance could trigger a review of the policy by the insurer: basically a reactive review, not proactive. In extreme cases, this review may cause the insurer to attempt to return the premiums you paid to you, rather than continue with the policy in place as it is. After the contestability period, there is little chance an insurance company would challenge the policy, absent deceit or a non-disclosure of a material fact. There are no guarantees, and it would depend on which facts are being contested. An insurance policy is a form of a contract, and as with all contracts there must have been an initial meeting of the minds to form it. When all parties agree on what they are contracting for, there is little reason for a judge to make changes down the road.

I once heard of a famous B.C. insurance case in which an executive of a large lumber company had a personally owned, non-cancellable disability insurance policy covering him in the normal course of his life as an office worker. He was subsequently laid off, and he then decided to open his own “one man” logging show. The insurance company did not want to cover him as a logger, and tried to return his paid premiums to him. Since he had the policy in place beyond the two-year contestability period, and he had no intention of working as a logger when the policy was first written, he was able to keep the original policy at the original premium prices.

This same logic should apply in the war zone or conflict area scenario. The key question to answer is: what did you know or what did you expect at the time your policy was written? As long as you were honest when filling out the form, you should be able to enjoy the security of the policy even if and when things change in your life. 

It may be more difficult for someone leaving for a war zone or conflict area to obtain a disability or life insurance policy at that time. If this is the case, check to see whether the firm you are going to work for has a group insurance policy in place.

The best advice: read your policy, ask your insurance agent questions and keep your head down!

Neil MacDonald is a lawyer with Harper Grey LLP, practising in aviation law. He holds an ATPL-H, and flies as an IFR Off-Shore Captain. nmacdonald@harpergrey.com This is not a legal opinion. Readers should not act on the basis of this article without first consulting a lawyer for analysis and advice on a specific matter.