A father has won his battle with Colonial Insurance after they threatened to cut medical coverage to his son Matthew who suffered spinal injuries in a diving accident last year.

It was feared Matthew, 19, would be paralysed after smashing a neck vertebra in the accident in shallow water off Horseshoe Bay and he was rushed overseas to the Lahey Clinic.

He is now being treated at the Shepherd Centre in Georgia and is beginning to get movement below his waist, but on November 9 Colonial said he was no longer eligible for group policy cover because he was no longer working.

However Reginald Raynor, owner operator of Raynor's Shell Station in Southampton said his son was still employed by him and his contributions were still being paid.

And he said it was against the Employment Act 2000 to sack an employee for sickness.

In the original letter Colonial said Matthew was now living in America and the company was not licensed to provide cover for US residents.

However Mr. Raynor said his son had no right to live or work there ? he was just there for treatment.

He said his son had a long road ahead of him to making a full recovery and he did not want his son without cover in case anything else happened to him.

"My concern is to protect the interests of my son. Right now he's disabled and cannot protect his rights."

Colonial then tried to withdraw that letter by sending a courier but Mr. Raynor kept a copy. A day later ? on November 10 ? the company removed the line referring to Matthew relocating but still said full coverage would cease as of December 1.

Yesterday the company issued a statement on the affair expressing surprise Mr. Raynor had gone to the media because it had been dealing with his lawyer.

The statement, from Colonial executive vice president Naz Farrow, said coverage for Matthew's disabling condition had been extended to October next year.

She said: "We are actively working to resolve the issues that pertain to his eligibility as he is no longer qualifies to be covered as an employee under the group health plan ? he is no longer capable of working as a full-time employee.

"However, we are now considering accepting him as a dependent under the plan but are waiting for confirmation of some outstanding details from Mr. Raynor."

She said Colonial had made every effort for Matthew Raynor and would make sure his medical needs are met.

Last night Mr. Raynor deferred comment to his lawyer Richard Hector who said the matter had been resolved.