In October 2019, a couple arranged cover for a trip between March 13 and April 1, 2020, including a cruise to parts of South America, together with the Falkland Islands and Antarctica.
On March 13, 2020, they left on the trip.
Unfortunately, on March 14, 2020, while they were in Buenos Aires, they were notified that the cruise had been cancelled. It was confirmed that this was due to port closures related to Covid-19.
As a result, they incurred additional costs, including new flights to return to New Zealand. The pair made a claim for the additional costs.
The insurer declined the claim, based on a policy exclusion for claims directly or indirectly related to a pandemic.
They made a complaint that the insurer did not notify them about the application of the pandemic exclusion, until after they had left on the trip.
Therefore, they did not believe the insurer should be able to rely on the exclusion.
The case manager's assessment
The exclusion applied to any claim directly or indirectly arising from a pandemic.
The pair accepted that the exclusion applied to the claim, because the cruise was cancelled due to port restrictions arising from Covid-19.
However, the couple believed that the insurer should be prevented from relying on the exclusion, because it did not inform them about it, before they left on the trip.
Generally, it is up to an insured person to read and understand the terms and conditions of the policy. If the insured is not satisfied, or does not accept the terms provided, it is his/her right to seek insurance elsewhere. The exclusion is a common term in insurance policies in the industry. Therefore, it was not of such a nature that the insurer was required to bring it to their attention.
On March 11, 2020, the World Health Organisation declared Covid-19 (also known as Coronavirus) a pandemic. This was before the couple left on the trip. The insurer did notify its customers about the exclusion on March 20, 2020. While this was too late for the couple, it was reasonable for the insurer to have some time to internally consider how it would approach the declaration by the WHO, given the broad application of the exclusion.
In addition, given that the WHO declared a pandemic on March 11, 2020, the exclusion applied from that time, regardless of whether the insurer had notified them.
In most cases, the IFSO Scheme can only consider whether an insurer has correctly applied the terms and conditions of the policy to the claim. Generally, the IFSO Scheme has no power to require the insurer to make any payments outside the terms of the policy, on a goodwill basis. In these circumstances, there were no grounds to require the insurer to make a payment to the couple.
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