Lei Wei and his wife, Ying Yue, were travelling by train through Europe. In a crowded train station, they needed to transfer trains and Ying Yue accidentally left her handbag on the luggage rack. They did not realise Ying Yue had lost her handbag until they arrived at the airport, just before boarding the plane to fly back to New Zealand.
Lei Wei contacted the lost baggage office at the train station, but the handbag was not there. Lei Wei lodged an insurance claim for:
- the handbag, purchased in 2013 for $920 but now valued at $1,150
- the wallet, a new similar wallet cost $688
- perfume, $219
- a driver’s licence, $38.20
- cash, $300.
The insurer accepted the claim for the handbag and the driver’s licence but depreciated the handbag by 20% for every year since its purchase in 2013. The insurer declined the claim for:
- the wallet because there was no proof of the original purchase price and
- the cash, because the policy only covered lost cash if stolen directly from the person or from a locked safe.
Lei Wei did not accept the depreciation on the handbag was reasonable. They had provided proof to the insurer that the replacement handbag now cost $1,150, indicating that this was an item that appreciated rather than depreciated in value over time. With respect to the lost wallet, Lei Wei felt the insurer should compensate them for the $688 it cost to buy a new wallet.
Lei Wei also complained that the insurer had not accepted the perfume claim. Ying Yue had purchased three bottles of perfume on their way to Europe and only had one combined receipt for all three perfumes. They were unable to identify which item on the receipt related to the lost perfume, but said this should not have affected the claim.
The insurer took another look at the claim and realised they had accidentally omitted the perfume from the claim and agreed to pay $219 for the perfume. However, the insurer maintained their calculation of the handbag claim was correct and explained how the depreciation had been calculated.
Lei Wei accepted the assessment of the perfume, the driver’s licence, and the cash but continued to dispute the assessment of the handbag and wallet. Lei Wei complained to FSCL.
We agreed the insurer had correctly assessed the claim. We explained to Lei Wei that although the handbag might have increased in value, the insurer had correctly assessed the claim. The policy clearly explained that if an item is more than two years old, the insurer will apply depreciation at the rate of 20% per annum from the date of purchase.
The policy also stated that proof of purchase was required for items worth more than $500. Because Lei Wei had submitted a claim of $688 for the lost wallet the insurer was entitled to ask for the original purchase receipt. As Lei Wei could not locate the receipt, the insurer could decline the claim.
Lei Wei accepted our view that the insurer had correctly assessed the claim.
Insights for consumers
It is upsetting to lose a treasured item, like a handbag. However, the policy wording determines how the value of the lost item is calculated. If you intend taking precious items overseas it is worth checking the policy wording and, if necessary, making enquiries about tailored insurance cover for specific items.