The overseas holiday
Donald and Sarah booked a seven week trip to the UK, Europe and North Africa, including a 10 day all inclusive tour in Morocco towards the end of their holiday. The Moroccan tour cost NZ $6,204 which included all transfers, accommodation and meals. Three days into the Moroccan tour Donald was admitted to hospital with acute delirium due to dehydration/viral infection. On medical advice Donald and Sarah cancelled the remainder of the Moroccan tour and returned to London where they stayed for an additional two weeks before flying back to New Zealand. In addition to medical expenses, Donald and Sarah made a claim under their travel insurance policy for a refund of $4,375 for the unused portion of their Moroccan trip and $4,672.96 for additional airfares, accommodation and rerouting expenses.
Donald and Sarah’s insurance company, All Expenses Paid , paid their claim for additional airfares and related costs but declined their claim for the unused part of the Moroccan trip.
Both costs were covered under the policy wording; however All Expenses Paid argued that it was not liable to pay both costs because the trip cancellation and additional expenses claims were for the same or similar services during the same time period.
All Expenses Paid’s position
All Expenses Paid argued that the purpose of its policy was to indemnify a person for loss. It considered that if it settled both claims, Donald and Sarah would be receiving a free holiday because they would not have incurred any expense for their travel. The policy’s purpose is to make good any loss, not to put the claimant into a better position than they would otherwise have been in.
Donald and Sarah’s position
Donald and Sarah said that the cost of the Moroccan tour was all inclusive within Morocco but did not include their travel to and from Morocco which was paid for separately. They had no way to recoup the cost of the unused portion of the tour either by a refund or by an equivalent service, such as a tour or accommodation or meals while in the UK. Donald and Sarah said they would not receive more than indemnity for their loss if both cancellation costs and additional expenses were refunded.
FSCL’s view and resolution
We noted that Donald and Sarah did not claim for any accommodation, transfers or meals after returning to the UK from Morocco before travelling back to New Zealand. The rerouting of existing flights and booking new flights were new expenses for which there was no equivalent in Donald and Sarah’s existing itinerary. Therefore we did not accept All Expenses Paid’s position that refund of the unused portion of the Moroccan tour would put Donald and Sarah in a better position than they would otherwise have been.
However, we did identify one similar expense for hotel accommodation in Morocco which was accepted and refunded by AEP as part of the claim for additional costs. As the cancelled Moroccan trip included accommodation costs, we accepted that refund of this particular cost would amount to a double refund. We concluded that AEP should refund the cost of the cancelled trip less the cost of accommodation already refunded. After discussion with AEP it became clear that the insurer was under the impression that the cost of the cancelled trip had included airfares to and from Morocco to New Zealand. We obtained a detailed breakdown of costs from the travel agent which confirmed the cost of the Moroccan tour only covered costs within Morocco so that the additional travel costs incurred, which AEP had already refunded, were quite distinct from the Moroccan tour. Once it received this information AEP accepted our view and agreed to refund the unused portion of the Moroccan tour less the accommodation cost already paid for.