Cancer-stricken Susan Hurrell sought legal aid to take one of the UK’s biggest insurance companies to court for damages. But she was refused because no-one was prepared to represent her on a no-win-no-fee basis. But now the dying grandmother is celebrating after winning a five-figure windfall to safeguard her family’s future.

Susan, 54, who has terminal ovarian cancer, has just heard she is to receive £71,000 from her life insurance company after a three-year dispute. At the time of her diagnosis in December 2004, Scottish Provident told Susan her policy only paid out on death. The grandmother-of-four later discovered her terminal illness made her eligible for the cash and the three-and-a-half-year legal battle began.

Susan had almost accepted defeat but, on Monday, in a surprise telephone call, she was told the insurers have accepted they owe her the five-figure sum. Today, the elated former supermarket worker, from Bedlington, said: “It was so out of the blue. I hadn’t heard anything these last few weeks and then to hear about this on the phone was unreal.

“I thought it must have been some kind of joke. I never thought they would pay out. I’d pretty much given up. It’s been a long struggle, but thank God it’s all come to an end.”

Susan’s plight won support from MP for Wansbeck Denis Murphy, who raised Susan’s plight in Parliament. News of the windfall came the day before Mr Murphy was to attend a meeting with Scottish Provident and the Association of British Insurers to discuss her case. Today, he said: “This is a great result. We have been campaigning very hard on this. I’ve been told the meeting is unnecessary because they have settled the claim in full. I’m delighted.”

The five-figure total includes interest, taking Susan’s payment significantly higher than the £60,000 she was hoping for and she should receive the cash in just a few days. Susan took out a Self Assurance Mortgage policy in September 2003 which would safeguard her family home if she died or contracted a terminal illness.

At first she was told the policy only paid out on death, but two years later she discovered she had held the terminal illness clause all along. But to her shock she was told by Scottish Provident that she had missed the 12-month claims deadline following diagnosis. The Financial Ombudsman Service investigated Susan’s complaint against the Glasgow-based insurance giant and although her complaint was not upheld, is was accepted that she was wrongly advised about the terms of the policy and she was offered £150 for her distress and inconvenience.

Scottish Provident agreed to consider the claim retrospectively, but on receipt of retrospective medical evidence they declined to meet the claim, even though her consultant oncologist Mr Raj Naik, based at Queen Elizabeth Hospital, Gateshead, told them: “This is almost certainly incurable and it is very likely Susan will die from the disease.”

Susan said: “It doesn’t really matter now. I’m just so pleased the money’s come through. I was so worried the family might not have been able to cope after I’m gone but now I can pay off the mortgage. I can’t really enjoy the money because I’m still having chemotherapy. But it’s a fantastic feeling to know I’ll have the security I was always entitled to. Denis Murphy has been brilliant. I don’t think this would have happened without him.”