FSCL Case Study

The insured travelled to Australia to spend time with her daughter. One day, she accidentally dropped her daughter’s laptop while she was sitting on the couch. The screen became discoloured and eventually stopped working. The insured’s husband had complimentary travel insurance with his credit card. She decided to claim the costs of repairing her daughter’s laptop from the insurer.

The insurer declined her claim because her daughter’s laptop was not covered by their travel policy.

Dispute

The insurer refused to pay for repairing the laptop because the policy only covered damage to belongings of legally dependent children. Because her daughter was an adult who lived independently from the insured, damage to her property was not covered by the policy.

The insurer also declined the claim for personal liability claims from “family members”.

The insured thought it was unfair and unethical for the insurer to rely on two conflicting sections of the travel insurance policy to decline her claim. On the one hand, the policy did not consider her daughter to be her “child”, but her daughter did qualify as a “family member” under another section of the policy.

Review

We reviewed the insurance policy and agreed with the insurer. Children were clearly defined within the policy as being legally and financially dependent on the parent, which the insured’s adult daughter was not. Similarly, the policy clearly excluded liability claims from family members. It only covered damage to a third-party’s property who was not a “family member”.  Although “family members” were not defined within the policy, we found that in any ordinary sense of the word, her daughter would be considered a member of her family.

While we had sympathy for the insured’s position, we concluded that on a plain reading of the insurance policy, the insurer was correct in declining her claim.

 Resolution

We issued our preliminary decision outlining our view. The insured agreed to withdraw her complaint. Insurance policies do not cover every possible risk or unforeseen event. The level of cover will vary from policy to policy and will be reflected in the premium charged.



Sept 2019

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