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CR245 Exceptions and Exclusions Benefits excluded for hospitalisation


Exceptions and Exclusions

Benefits excluded for hospitalisation – mental disease or disorder – an interpretation of the policy wording


In denying liability the insurance company relied upon an exclusion in the policy for mental diseases or disorders. The policyholder denied mental illness.


The policy provided cash benefits relating to periods spent in hospital. The policyholder was admitted to a general medical ward for a period of 4 days suffering from acute tubulo-intestital nephritis/pyelonephritis. She was subsequently transferred to a general psychiatric ward for a further period of 5 days with a new diagnosis – severe depressive episode without psychotic symptoms. A psychiatrist subsequently diagnosed major depression.

The claim for the period spent in the general medical ward was admitted and payment made in accordance with the general terms and conditions of the policy. Because the policy excluded “….hospital confinement consequent upon, or contributed to by, mental disease or disorder”, the claim for the period spent in the psychiatric ward was declined.

The issue was whether depression is a mental disease or disorder.The great majority of depressed people do not have a ‘mental disease or disorder’. In this case the office accepted that depression is not a mental disease, but took the view that when a non-psychotic patient is sufficiently depressed to warrant treatment as an inpatient in a psychiatric ward, ‘disorder’ would be an appropriate descriptive term; it indicated a disturbance of orderly function.

The insertion of a ‘disorder’ in the exclusion clause, in addition to ‘disease’, would indicate that a condition different to a disease was intended, and the contract therefore intended to exclude a condition such as that for which the complainant was treated in the psychiatric ward.


We supported the insurance company’s claim for the period spent in the psychiatric ward.

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