In response to those here who said "they didn't read the policy", none of us have seen the policy. Often, maybe even usually, the coverage and exceptions are buried deep in the legal terms and conditions. Some policies I've seen, now do list more clearly what is, and what is not covered. It's often the cheaper policies that don't offer broad coverage. Still, who here really would consider riding a pony for leisure on a beach as an "extreme sport"? Shame on their insurance company. Seems like the employer is a decent one and I hope the lady revovers as swiftly and as fully as possible.
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