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A broker accepts responsibility for poor advice

Marlene and Hans were travelling in Australia when Marlene slipped in the bathroom and broke her arm. Hans alerted the hotel staff who called an ambulance. The paramedic suggested Marlene go to a private hospital because public hospitals were at capacity dealing with a flu epidemic and Hans agreed. A doctor confirmed the break, strapped Marlene’s arm, and suggested she come back in a couple of days for an operation to set the arm.

When Hans and Marlene returned to their hotel, Hans called his insurance broker who advised Hans to keep all the receipts for the treatment and lodge a claim when they got home. Hans followed the broker’s advice.

Marlene was successfully treated in the private hospital and returned home. With the help of his broker, Hans submitted the claim to the insurer. The insurer declined the claim because the policy contained an exclusion for treatment in private hospitals in Australia.

There is a reciprocal agreement between New Zealand and Australia that citizens of each country are eligible for free medical treatment at public hospitals when travelling. The travel insurance policy obliged Marlene to go to a public hospital, and further advised Hans and Marlene to obtain approval from the insurer before proceeding with any medical treatment.

Hans, Marlene and the broker disagreed with the insurer’s decision and the broker referred their complaint to FSCL.



The broker explained that:

  • Marlene has osteoporosis and any delay in surgery could have affected her long-term recovery.
  • Hans acted on the paramedic’s recommendation to go to a private hospital because the public hospital was under stress due to the flu epidemic
  • Hans and Marlene were unaware of the exclusion for private hospital treatment.

The insurer was not unsympathetic but said there was plenty of time between the initial accident and Marlene’s surgery for Hans to call and check her treatment was covered. The the insurer stood by its decision to decline the claim.



When we reviewed the complaint, we agreed that the policy excluded medical treatment in a private hospital in Australia. We considered the insurer was entitled to decline the claim.

However, we were concerned that the broker did not alert Hans to the policy exclusion for treatment in a private hospital. We suggested to the broker that it might be responsible for Hans’ loss.

The broker reconsidered its position, agreed it was at fault and advised that it would resolve the complaint directly with Hans and Marlene.



On the strength of the broker’s advice, we discontinued our investigation.


Insights participants

A broker is obliged to be familiar with the policy wording and alert clients to exclusions and conditions within the policy. In this case, the broker should have told Hans that private hospital care was not usually covered by the policy and that he should contact the insurer to see whether it was prepared to make an exception.