IFSO Case Study

Mrs Hall* had payment protection insurance and made a claim to the insurer when her employer terminated her employment due to COVID-19.

The insurer declined the claim, on the basis that Mrs Hall had been made redundant due to the impact of COVID-19 and, therefore, the claim was excluded by the policy’s state of emergency exclusion. Mrs Hall complained her redundancy was caused by her employer restructuring, rather than COVID-19. She said New Zealand’s borders were closed from March 2020 and she was made redundant in August 2020.

While the IFSO Scheme found that the policy provided cover for redundancy, it did not cover redundancy arising from “state of emergency”. The policy did not define a “state of emergency”; however, one can be declared by the New Zealand Government under section 66 of the Civil Defence Emergency Management Act 2002.

The state of emergency was in place from 25 March to 13 May 2020, and Mrs Hall was made redundant in August 2020, when the state of emergency was no longer in place. While Mrs Hall was made redundant due to COVID-19, there was no evidence to suggest her redundancy arose from the state of emergency, which is what the exclusion required. The case manager discussed this with the insurer, and it agreed to pay the claim.

Complaint settled

Consumers should be aware that exclusions can take away cover in certain situations, and it is important to know when they will apply.


*Names changed



March 2022

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