Many years ago (1989-1990) I acted in a case in which an insurer denied liability alleging that the insured had cut off his own hand to collect on several policies of insurance. The conduct was so bizarre that lay people have always had difficulty believing that anyone could have done such a thing.
29 years after I conducted that case, I came across this news story today, of a Slovenian woman who severed her own hand, with the assistance of her family, in order to collect insurance money. The facts of the two cases bear a striking resemblance. Despite the passage of time, the human ingenuity applied to attempts to defraud insurance companies remains undiminished.
Here is a link to the one and only reported decision in the case I conducted: Picken, Kenneth John v Crusader Insurance Company of Australia Ltd  VicSC 536 (12 November 1990).
The judge in that case, Vincent J, described the circumstances that excited the insurer to deny liability as follows:
The matter comes before the court against a somewhat unusual background. The plaintiff has issued a proceeding in which he alleges that the defendant is liable to pay to him the sum of $500,000 in respect of the loss of his left hand and a weekly income of $1,000 during a period of hospitalisation. It is alleged that this liability has arisen under the terms of a policy of insurance taken out by the plaintiff with the defendant. A further claim is made in relation to another policy involving $250,000 and weekly income during hospitalisation of $500.
The defendant has denied liability contending that the plaintiff has not sustained injury by accident, as he has alleged, but has in fact severed his own hand deliberately. This defence is, as I have been informed, based upon evidence which it is said indicates that it is at least unlikely that the accident which the plaintiff states resulted in the loss of his hand could have occurred in the circumstances alleged by him.
It is further claimed on behalf of the defendant that at the time of the alleged accident the plaintiff held eight insurance policies with five insurers which would provide benefits of no less than $1.5 million in the event that he lost the use of one limb.
It is also alleged that during the period April to June 1988 the plaintiff either took out new cover or increased the coverage on pre-existing policies in respect of six out of eight policies by an amount in total of not less than $950,000 in the event that he lost the use of one limb.
The defendant contends that in such circumstances what must be perceived as at least a reasonable possibility exists that the plaintiff engaged in a bizarre act of self mutilation for the purpose of securing a substantial financial benefit.