Insights for participants and consumers
Insurers are required under the Fair Insurance Code to deal with claims and communicate with the customer in a timely manner. If the insurer fails to do so, they may have to compensate the customer for the stress and inconvenience they experience as a result.
Consumers should check their travel policy wording because most exclude cover for loss of enjoyment if something unexpected happens on their trip.
What happened?
In May 2024, Sam and Anna travelled to New Caledonia for a two-week holiday. They had a complimentary travel policy as a feature of their credit card. The policy was underwritten by an insurer. Sam and Anna paid for their flights and accommodation using their credit card. They did not book specific tours or activities beforehand, as they decided to do this on a day-to-day basis once they got to Noumea. Sam and Anna were in their 70’s and both had heart conditions.
Unfortunately, on the day Sam and Anna landed, civil and political unrest broke out in Noumea and the city was locked down. They could not leave their accommodation and were effectively trapped there for ten days until they were able to return home on a flight arranged by the New Zealand government.
They lodged their claim with the insurer immediately on their return in late May 2024. The claim was finalised in November 2024.
Sam and Anna did not believe the insurer had paid all they were entitled to under the policy. They were also concerned about the delay in assessing the claim and the lack of communication during the claims process. They asked FSCL to look into these matters.
What was the outcome of FSCL’s investigation
While some of Sam and Anna’s holiday expenses were covered by the Tour Cancellation section of their policy and paid by the insurer, they felt they were entitled to the maximum amount available under this section, $4,000.
Although they had not booked specific tours or activities prior to arriving in Noumea, they said their whole trip was a tour and this was effectively cancelled, and so they should be covered for this.
It was clear that Sam and Anna’s trip was ruined by the civil disorder in New Caledonia, and they experienced significant distress from their experience in Noumea. However, after looking at the policy wording, we considered the insurer had paid all they were obliged to pay under the policy to Sam and Anna. The policy did not provide cover for expenses the insured would have incurred had the holiday not been cut short.
Sam and Anna were effectively claiming cover for the loss of enjoyment of their trip. However, the policy specifically excluded cover for costs and losses arising from loss of enjoyment. We explained that this is a standard clause in travel insurance policies.
Sam and Anna accepted our view on this issue.
However, we were concerned about the insurer’s claims process. We agreed with Sam and Anna that there had been significant delays in the claim assessment. Further, the insurer’s communication with them had been poor and they had missed opportunities to explain the policy coverage to Sam and Anna. Had the insurer explained the policy coverage at an earlier stage, Sam and Anna may never have complained.
The insurer accepted our comments and offered $1,000 to resolve the complaint. Sam and Anna accepted the offer, and the complaint was closed.