The trip is planned and then rescheduled
In August 2013, Laurence and his wife began planning a family trip to Europe for July 2014. Also in August, Laurence’s father, Jim, was diagnosed with bowel cancer. The cancer was surgically removed and a treatment plan was put in place, including chemotherapy.
Jim responded well to treatment and in mid-December, was able to stop chemotherapy sessions and moved to a 3-monthly monitoring programme. Laurence went ahead and completed booking the holiday.
In early June 2014, Jim went for a check up and it was discovered that his health had deteriorated. Towards the end of June, Jim was admitted to hospital. He was then moved to a hospice and sadly passed away on 5 July 2014, aged 74 years.
Laurence and his family had been due to leave New Zealand for their trip on 4 July. Laurence decided on 1 July that they could not take the trip, and rescheduled it for later in the year. Laurence claimed $9,550 in rescheduling costs from his travel insurance company, Abroad Limited.
The claim is declined
Abroad Limited declined the claim on the basis of an exclusion clause in the policy which said Abroad Limited would not pay for any pre-existing medical condition(s) (PEMC) of the insured, or any other person on whom the travel depends. Laurence argued that although Jim had a PEMC (cancer), his sudden deterioration and death in June/July 2014 were events which were completely unforeseen.
The policy defined a PEMC as a sickness, injury or condition which has occurred or which the insured has been aware of within the last six months prior to the commencement of travel, or for which treatment, medication or medical attention has been sought, given or recommended.
Laurence argued that the definition of a PEMC should be looked at 6 months prior to travel. In January 2014 Jim had undergone surgery to remove the cancer, completed chemotherapy, and the cancer was no longer present. Laurence said this meant Jim did not have a PEMC.
Did the exclusion clause apply?
When an insurance company assesses a claim, the first step will usually be to determine whether the insured has satisfied an insuring clause in the policy (the clause in the policy which provides cover, or outlines what the insurer will pay for). If the insured has cover under the policy, the onus shifts to the insurer to prove an exclusion clause applies, if the insurer wants to exclude cover.
We looked at the PEMC exclusion clause wording in more detail. We concluded the exclusion clause did not apply because the way it was worded meant it only excluded the costs of treating a PEMC itself. It did not exclude costs which may arise from or relate to a PEMC, including the costs of re-arranging travel. We outlined our view to Abroad Limited and said that the claim should be paid.
Abroad Limited submits that the insuring clause was not satisfied by Laurence
Abroad Limited then argued that Laurence had not satisfied the insuring clause of the policy. Abroad Limited argued that under the insuring clause the event causing the loss had to have been ‘unforeseeable’, and that it did not consider Jim’s death to have been unforeseen by Laurence. This was because Jim had been diagnosed with cancer in September 2013, had chemotherapy through to December 2013, and then had regular 3 monthly monitoring.
Review of the medical evidence
We looked at a large amount of information from all the medical professionals who cared for Jim.
In deciding whether Laurence had satisfied the insuring clause of the policy we had to determine what Laurence knew about Jim’s health. The medical evidence showed that Laurence had attended some of Jim’s medical appointments along with Jim and Mary. However, it was unclear exactly how much Laurence knew about Jim’s health and how much Jim and Mary had told Laurence and rest of the family about Jim’s health.
What we did know was that Laurence had been to two appointments with his parents on 26 September and 31 December 2013. Laurence was aware that Jim’s illness was terminal after attending a clinic with Jim on 26 September, just before the policy came into effect (1 October 2013). From 31 December onwards, Laurence knew that Jim needed to continue with chemotherapy.
We also noted that Jim was feeling better in March 2014 having stopped chemotherapy to go on a cruise. There were no issues of concern between March and May 2014. It was only in late June 2014 that Laurence and his family were told that Jim’s death was imminent. In other words, the medical evidence did not show that Laurence’s family had been told to expect Jim’s death within any particular time frame, until a family meeting in late June.
Assessing the policy in light of the medical evidence
For there to be cover under the policy, in Laurence’s view, Jim’s deterioration in health and eventual death needed to be ‘unintended, sudden and unexpected’. Jim’s death was clearly unintended. Arguably it was also sudden because Jim had been feeling well from at least March 2014 and continued to feel well until his quick decline in late June 2014.
However, Jim’s deterioration in health and death could not be said to be ‘unexpected’ by Laurence. Laurence knew his father’s illness was terminal from at least 26 September 2013, and in December 2013/early January 2014 that Jim was still needing chemotherapy treatment. Although there was no evidence to suggest Laurence or anyone else knew when Jim’s illness would take his life, this had been a real possibility at some stage in 2014.
In our view, Laurence knew there was a real risk of his father becoming seriously ill and passing away at the time the policy commenced in October 2013. We said it was not reasonable for Laurence to expect to be able to pass on that very real risk to Abroad Limited. We found that the insuring clause had not been satisfied, and that Abroad Limited had correctly declined Laurence’s claim.