Mary, aged 83, decided to take a cruise from 9-22 March 2017. As Mary was travelling alone she took out the insurer’s “70+ insurance” so that she was ‘fully insured.’
On 13 March, while at a sheep station in Akaroa, Mary was getting into a van, when someone pushed her into the step from behind. This tore a substantial amount of skin and flesh from the front of Mary’s leg, making walking difficult and severely limiting Mary’s enjoyment of the rest of the cruise.
Before returning to the boat, Mary was treated for her injuries at a medical centre in Akaroa. She was unable to disembark and enjoy the off-boat excursions in Dunedin. Further to this, Mary said that her injury made walking difficult and changed the manner in which she participated in the cruise.
Following Dunedin, the boat cruised through Fiordland and the Marlborough Sounds. There was not another chance to disembark until the boat arrived in Melbourne on 18 March.
After arriving in Melbourne, Mary decided that it was necessary to cut her trip short. She booked a flight home to Auckland and arrived in the early hours of 19 March, three days before the cruise was scheduled to arrive. After arriving back in NZ, Mary immediately sought further medical attention for her leg. The wound required dressing three times a week for two months.
Mary filed an insurance claim. Mary sought payment for the “cancellation” of her trip from the time of the injury until the end of the cruise (10 days), as well as the medical costs associated with treatment of her injury whilst away, and the extra expense incurred flying, rather than cruising, back to Auckland.
Review of insurance policy
Mary’s claim for medical expenses relating to her leg injury was accepted in full because they were
reasonable medical charges, incurred as a result of an injury which occurred on your journey.
The charges which Mary incurred booking flights home, and her claim that she should be reimbursed for 10 days of the cruise, were to be assessed under the ‘curtailment’ and ‘cancellation’ sections of her policy. They read
Curtailment- If Mary cannot complete her journey due to an unforeseeable circumstance beyond her control, the insurer will pay additional travel and accommodation expenses
Cancellation- If Mary must cancel her travel arrangements due to any unforeseeable circumstance beyond Mary’s control, the insurer will pay for irrecoverable travel and accommodation expenses.
The policy however also limited the amount the insurer would pay by stating;
Wherever claims are made by Mary under this section, we will pay the higher of the two amounts, not both.
When the insurer declined to cover the cost of Mary’s cruise from the time the injury occurred and Mary’s flight home, Mary complained to FSCL.
Mary believed that her cancellation costs began when she incurred the injury. Her enjoyment of the rest of the cruise was severely impacted by the fact that she could not walk easily and her cabin was a substantial distance from the dining and leisure areas. Mary’s injury also meant that she could not enjoy the off boat excursion in Akaroa or Dunedin.
Mary said that she had no choice but to stay on the cruise because there was not another chance to disembark until Melbourne. She argued that the insurer ‘thought she was having fun’ because she was getting food delivered to her cabin, but this was out of necessity due to the nature and effect of her injury.
Mary felt there was not enough disclosure, especially in regard to the insurer’s 70+ insurance policy and wanted to make the insurer aware that it was misleading people into thinking they had cover for everything when they did not.
The insurer paid the cost of four days cruising under the ‘cancellation’ head of Mary’s policy. Because Mary had paid $5,265.84 for the 14-day cruise, the cost per day was $376.13. Mary’s cancellation of the cruise four days early meant, in the insurer’s eyes, she was entitled to $1,504.42.
Although Mary felt like she could not enjoy the cruise as much as she would have without the injury, the logistical issues surrounding disembarking meant that Mary remained on the cruise for five days following the accident. While Mary believed that the injury had meant she could no longer do many of the things which she had booked the cruise for, the policy was clear in the fact it only compensated for financial loss.
A general exclusion contained within the policy stated:
this policy does not cover any consequential loss, loss of enjoyment or loss of income.
The additional costs of Mary’s flight and land transfer in Melbourne came to $322.83 while the cancellation of Mary’s cruise four days early amounted to $1,504.42. Because the policy stated that the insurer would pay the higher of the two sums, rather than both, the insurer was right to decline to cover the cost of Mary’s flight home. Although we sympathised with Mary’s situation, the insurer was not obliged to refund the cruise cost since the injury occurred because Mary was still using what she had paid for (including her cabin, transport to Melbourne and meals) until she disembarked in Melbourne.
Mary was disappointed with the insurer’s advertising and believed that the insurer had told her she had cover for everything. We explained to Mary that an insurance policy was a contract and we had to give effect to the words contained in the policy.
Key insight for consumers
It pays to read the contract and understand what the policy covers and what it does not cover. Invariably, insurance policies will not cover loss of enjoyment or consequential loss.