Two people had planned a safari tour to Africa. Both obtained travel insurance policies from the same insurer. A month before their trip, one man got ill and his GP declared that he was unfit to travel for the next three months. His would-be companion cancelled his trip because most of the tour costs were intended to be shared and, without his friend participating, he could not afford the additional costs of rebooking as a sole traveller.
The man who fell ill submitted a claim to the travel insurer, who fully refunded the cost of his cancelled trip. However, when his friend claimed a refund for his cancelled trip, the insurer declined his claim.
The insurer said that the policy only covered him cancelling his trip if the cancellation was due to the unexpected and serious sickness of his travelling companion. The insurer said that the sickness was not life-threatening, and did not necessitate the other man cancelling his trip to remain in New Zealand with him.
He complained to FSCL that the insurer had incorrectly declined his claim.
Dispute
He said that the insurer should have taken into account that it was outside his control that the trip was cost prohibitive if he and his friend could not travel together.
He also complained that his friend’s hospital stay of more than one day should mean he was considered to have a serious sickness.
Review
Our preliminary view was that the complaint should be discontinued, because the policy did not cover the claim. The policy’s “serious sickness” definition meant that the man’s sickness needed to be of a severity that it was medically necessary for his friend to stay in New Zealand to be with him, because there was an immediate threat to his life. We reviewed the evidence and found that, although he was too sick to travel himself, it was not medically necessary for his friend to remain with him.
We also noted that his policy was a business policy. It was intended to cover situations where business associates are on work trips. If one associate were to fall ill, it would not be unusual for the other to continue on with the work trip (as opposed to a personal policy where it would be more likely for you to stay in New Zealand if your travel companion could not travel).
There was the ability for him to nominate people to be a named person on his policy. Had his friend been a named person on his policy, then he would only have to have been suffering from a “sickness” not a "serious sickness" for his friend’s cancellation to be covered.
His problem was that he was not aware that he would have to name people on his policy, to take full advantage of its cover.
We suggested he discontinue his complaint. However, we also suggested that he consider contacting his insurance broker about the alleged failure to inform him of the need to name people on his policy.
Resolution
The insurer accepted our view. The insured disagreed, but decided to discontinue his complaint. He did not choose to pursue a complaint against the broker.
Insights for consumers
It is important for consumers to read and to understand their policies. If a policy is unclear, or if you do not know whether it will cover a certain situation, then consumers should question their brokers and insurance companies. If a situation occurs that may necessitate the cancellation of travel, check with your broker about whether you will likely be covered, before you authorise the cancellation.
