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Benefits of an early settlement offer

Gary’s claim

While travelling in England Gary lost his wallet containing 250 pounds. Gary last had his wallet while paying for a taxi and realised it was missing after walking 100 metres from the taxi stand. Gary immediately called his travel insurance company who said his loss would be fully covered. On Gary’s return to New Zealand he made his claim but after a long period of no contact Gary was told he had sent the claim to the wrong location. During two further conversations with the insurance company, Gary was told he would be fully covered for his loss.

However, upon processing the application, the insurance company declined the claim as Gary’s policy only covered cash stolen from your person (i.e. in your pocket), not for accidental loss.

The insurance company’s argument

The insurance company recognised that Gary may have been wrongly advised when making inquiries that his loss would be fully covered. However, if this advice was given, it was done after Gary had taken out the travel insurance policy, and the insurance company said Gary had not been prejudiced by being given wrong information after the fact.


When FSCL contacted the insurance company, the company opted to settle immediately for the full amount of Gary’s loss. The insurance company recognised that it had caused Gary some disappointment by telling him that his lost money would be covered, when in fact the loss was not covered. In the interests of expediency, the insurance company decided to settle early in the investigation process.