Accidental death policies, by definition, provide benefits when the insured dies as the result of an accident. However, not all accidents are covered since most policies have exclusions limiting the type of accidents that will be covered. State Insurance Codes have placed limitations on what exclusions an insurance company can place in such policies.

Stennett & Casino assisted a recent client whose 59 year old mother died of an accidental overdose of her pain medication, Oxycodone. Her mother was insured with an accidental death policy from Stonebridge Life Insurance Company. However, her claim for benefits following her mother’s death was denied.

Stonebridge Life denied the claim citing two exclusions in the policy. The first exclusion excluded losses caused by the use of intoxicants or prescription medications unless taken as prescribed. Stonebridge Life asserted that the insured took more than the prescribed amount, giving rise to the exclusion. The second exclusion cited by Stonebridge Life was an exclusion for losses caused by illness or the treatment thereof. Stonebridge Life asserted that the medication was a treatment for chronic pain and thus, again was excluded by the policy.

On behalf of our client we argued that California Insurance Code Section 10369.12 limits the insurance company’s ability to exclude death caused by drugs. Section 10369.12 allows an insurance policy to include an exclusion “in the form set forth herein.” The exclusion for intoxicants in the Insurance Code states:

“The insurer shall not be liable for any loss sustained or contracted in consequence of the insureds being intoxicated or under the influence of any controlled substance unless administered on the advice of a physician.

Stonebridge Life’s exclusion in its policy was similar, but not identical to the above language. The crucial difference was that Stonebridge Life’s exclusion excluded losses caused by a person using drugs unless taken or used as prescribed by a physician. This language clearly required the insured to take the medication within prescribed amounts.  Stennett & Casino argued that the language from California Insurance Code – unless administered on the advice of a physician – does not require the patient to take the medication exactly as prescribed.

A Federal Judge in the Northern District of California agreed with our interpretation of the Insurance Code and the policy and has ruled that in California an insurance company cannot exclude death caused by an overdose of prescribed medication, even though the decedent took more than was prescribed by his/her physician. Based on the same reasoning, the court held that the medical treatment exclusion was inconsistent with the California Insurance Code since it would be just another method of getting around the limitations set forth in California Insurance Code Section 10369.12 with regard to losses caused by use of prescription medication.

The opinion of the court in Smith v. Stonebridge Life Insurance Co can be found on Westlaw at 2008 WL 4531818.