In June 2019 Sally and Manu booked a wildlife tour overseas, planning to travel between 16 March and 17 April 2020. At the same time as they booked their trip, Sally and Manu purchased travel insurance.
Sally and Manu left New Zealand on 16 March 2020, but almost as soon as they arrived, the country to which they had travelled went into lockdown as a result of the Covid-19 pandemic. Sally and Manu did not wait for their tour to be cancelled, but bought new tickets, with a different airline, and flew home on 23 March 2020. Sally and Manu were unable to use their original tickets, because that airline was transiting through Singapore and the Singaporean government had closed its borders to all transiting travellers.
Sally and Manu submitted an insurance claim with their insurer for both the cancelled tour and the rearranged airline tickets.
The insurer declined Sally and Manu’s claim, referring to an exclusion in the policy for government interference with travel. Sally and Manu did not accept the insurer’s decision and complained to FSCL.
Sally and Manu considered the insurer’s decision very unfair. They had booked their tickets months before there was any sign of Covid-19. They had lost the cost of the wildlife tour, their tickets to fly home, and the cost of replacement tickets to get home safely.
The insurer said Sally and Manu had returned home early because the government of the country they were visiting had introduced internal travel restrictions, interring with their travel plans.
The insurer also said it was not obliged to compensate Sally and Manu for the loss associated with the airfares because the Singaporean government had also interfered with their travel plans when it closed its borders to transiting travellers.
It was our view that Sally and Manu’s claim fell within the exclusion clause for government interference with travel plans, allowing the insurer to decline the claim.
We explained that insurance policies are made up of insuring clauses, describing circumstances where insurers agree to provide cover, and exclusion clauses, setting out the circumstances where insurers are not prepared to cover the risk.
Although the insuring clause was met, Sally and Manu had lost the unused portion of their travel costs and incurred additional expenses following the cancellation of travel due to an unforeseen event outside their control, the insurer was entitled to consider any exclusion clauses that might apply.
In Sally and Manu’s situation, the insurer had excluded from cover any loss arising directly or indirectly from a government’s interference with travel plans.
The government of the country Sally and Manu had travelled to had introduced travel restrictions in much the same way as the New Zealand government, at about the same time. While the government did not force them to leave, the restrictions on travel would have made their trip impossible. It was our view that the travel restrictions caused Sally and Manu to abandon the wildlife tour and return to New Zealand immediately.
Sally and Manu had intended to transit through Singapore on their way back to New Zealand, but when the Singaporean government closed its borders to non-residents transiting through Singapore, the Singaporean government also interfered with their travel plans. Therefore, the loss that Sally and Manu suffered when they rearranged their tickets was also as a result of government interference with travel plans.
We told Sally and Manu that the insurer was entitled to decline the claim. Sally and Manu said that this decision was unfair and that they intended taking the matter to the Disputes Tribunal. We discontinued our investigation on this basis.
Insights for consumers
Despite cover for unforeseen events, insurers are entitled to limit their risk by including exclusion clauses within the policy. When Sally and Manu purchased the policy, the insurer agreed to cover unforeseen events unless the loss was caused by government interference with travel plans. This claim fell within this exclusion, allowing the insurer to decline the claim.