In October 2019, Marlena booked flights for her and her husband to travel on 22 February 2020 from Auckland to India, via Taiwan. A day later Marlena booked return flights with a second airline, to fly from India to Auckland, via China, on 5 March 2020.
On 30 January 2020, Marlena’s travel insurer issued an advisory in relation to travel affected by Covid-19. The advisory said that, based on New Zealand’s Ministry of Foreign Affairs and Trade (MFAT) advising New Zealanders to avoid non-essential travel to China, there would be no cover under their policies except when travel to mainland China was affected.
Also on 30 January, Marlena called the insurer. Marlena and the insurer’s staff member discussed that Marlena was in a difficult position because, although her outbound flights were not via mainland China, her return flights were. However, if she cancelled her whole trip, she may not have cover for her outbound flights. Marlena said that she had decided to cancel the trip in any event; she and her husband felt it was not worth the risk of travelling, because of the developing Covid-19 situation.
On 2 February, Marlena contacted the second airline to cancel the return flights, and the costs were fully refunded on 12 February.
On 5 February, Marlena submitted a claim to the insurer for the cost of her outbound flights. Marlena said she was going to re-book the trip for six months later, thinking the virus would have disappeared by then. Marlena said the reason for re-scheduling the trip was because her husband suffered from low immunity, and they were worried about him contracting the virus on the flights, and during the layover in Taiwan.
On 12 February, the insurer declined Marlena’s claim. The insurer said that because MFAT had not issued travel advisories or restrictions for Taiwan or India, it was Marlene’s choice not to travel, and a ‘disinclination to travel’ exclusion applied.
On 20 February, Marlena re-scheduled her original outbound flights, and purchased new return flights, for September 2020. Marlena incurred $480 in re-scheduling fees. Some months later, Marlena was refunded all of her flight costs. However, she remained out of pocket for the $480 in re-scheduling fees. The insurer’s position remained the same, and it would not cover her for the $480. Marlena complained to FSCL.
Marlena was of the view that her claim should be paid. Marlena said it was not her choice not to travel in March 2020. Rather, she rescheduled the trip because of the fear of catching Covid-19. Conversely, the insurer considered Marlena’s claim arose from a ‘disinclination to travel’ and was excluded from cover.
We considered that Marlena’s claim should be paid. We said the insurer seemed to be making it a condition of cover that MFAT had issued a ‘do not travel’ advisory for Taiwan and India. However, this was not the case. The policy had a general insuring clause saying that there was cover for unforeseen circumstances. Another policy section said there ‘may’ be cover if a person re-scheduled a trip because of an MFAT ‘do not travel’ advisory. But the two sections could not be conflated.
We then looked at the ‘disinclination to travel exclusion’. The way the exclusion was worded meant that the doctrine of proximate cause applied. For the exclusion to apply, the proximate/dominant cause of Marlena rescheduling the flights needed to be her simply choosing not to travel in March 2020. However, the reason Marlena decided to reschedule was a genuine fear of the virus.
By a fine margin we thought this was a reasonable fear. Although the virus was not, comparatively speaking, very widespread outside of China by 30 January, in the few weeks prior to that date, things were moving rapidly. The virus had been reported in Taiwan, Hong Kong, Macau, and the United States, and Wuhan was shut down. On 25 January, three cases had been confirmed in Australia. And on 30 January, the New Zealand government chartered a flight to evacuate New Zealanders from Wuhan.
We found the disinclination to travel exclusion did not apply in the circumstances of Marlena’s case.
We advised the insurer of our views on the complaint, and they decided to pay Marlena’s $480 claim.
Insights for consumers
In early 2020, the Covid-19 situation was unfolding rapidly, and many people had to cancel or change their travel plans. When we are deciding whether the cancellation was simply a ‘disinclination to travel’, or caused by a genuine fear of contracting Covid-19, each case will depend on its specific facts. This will include looking at when the trip was cancelled, and where the person was intending to travel.