On 9 March 2016, Rabindra travelled with his wife from Bangladesh to New Zealand. Their journey included a five and a half layover at Kuala Lumpur airport.
Rabindra packed his valuables into a carry-on bag and placed this bag into a suitcase which he then checked-in. The valuables included a pair of diamond earrings, two gold bracelets and $2,500USD in cash.
On 11 March 2016, Rabindra arrived in New Zealand and upon opening his suitcase, he discovered that his valuables were missing.
Rabindra contacted the airline by email about his loss, but failed to get a proper response.
Rabindra made a claim for his lost valuables to his travel insurance company. The insurance company declined his claim because it considered Rabindra had not taken reasonable care of his valuables. Rabindra complained to FSCL.
The complaint
Rabindra considered that the insurance company had incorrectly declined his claim and that he had taken reasonable care of his valuables.
Rabindra said that he decided to place his valuables in his checked-in luggage because he considered this to be the safest way to transport the items. Rabindra said his wife was unwell at the time of their flight and he was aware they had a lengthy stopover at Kuala Lumpur airport. Rabindra said he did not want to worry about his valuables during the flight so he packed these into his checked-in suitcase.
Rabindra also said that he placed the $2,500USD cash in his checked-in luggage because he was aware Bangladesh had a limit of $500USD able to be taken out of the country.
Review
Rabindra’s policy covered accidental loss of personal items including cash. However, the policy also contained a number of conditions that must be met before a claim is paid.
For the insurance company to accept Rabindra’s claim, he needed to:
- have reported the loss to the local police or appropriate authority as soon as possible after the discovery of the loss and obtain a written acknowledgement
- provide original receipts or documents to substantiate his claim
- have taken all reasonable precautions for the safety and supervision of his items.
Police report
Rabindra said he did not contact the police to report the loss as he did not know where the loss occurred. He thought that the New Zealand Police would not be able to assist him because it was likely that the loss had occurred outside New Zealand.
When he submitted his claim, Rabindra did not tell his insurance company that he had contacted the airline to report the loss. Rabindra provided us with the confirmation email he had received from the airline.
The insurance company said that its policy specified that the local Police or appropriate authority has to be contacted and written acknowledgement needs to be obtained. However, it said that the email to the airline was “better than nothing”.
Receipts
Rabindra said he could not provide any information to substantiate his claim for the bracelets or cash. He said that the cash had been a gift from his wife’s brother and the bracelets had been purchased in the 1980s. However, he was able to provide a receipt for the earrings which had been purchased for $1,400NZD in 2014.
Reasonable precautions
The policy wording provided: “you must take all reasonable precautions for the safety and supervision of your items”.
We accepted that Rabindra held the best intentions when he put his valuables in his checked-in bag. In Rabindra’s view this was the safest way to transport his valuables. However, we considered that he could have taken further precautions to protect his valuables, for example, he could have locked his suitcase.
Many travel insurance policies provide that there will be no cover for any valuables placed in checked-in luggage. However, Rabindra’s travel insurance policy did not specifically exclude cover for valuables lost or stolen from checked-in luggage. In our view, if the insurance company did not intend to ever cover valuables lost or stolen from checked-in luggage, it could have made its policy wording clearer and included a specific exclusion to this effect.
Outcome
We found that the insurance company was entitled to decline Rabindra’s claim for the bracelets and the cash. Rabindra was unable to provide any documents to substantiate his claim for these items.
We considered that Rabindra intentionally took a risk placing the $2,500USD cash into his suitcase. We found that by taking this risk and placing the cash in his suitcase, he had failed to take all reasonable precautions to prevent a loss.
However, Rabindra had provided a receipt for the earrings and had attempted to report the loss. For these reasons, we found that the insurance company should accept Rabindra’s claim for the earrings, being $1,400.
The insurance company agreed to pay Rabindra $1,400 for the earrings. Rabindra was happy with this outcome and did not want to take his complaint any further.
Our insight
It is very common for travel insurance policies to have a blanket exclusion for any valuables lost or stolen from checked-in luggage.
The best way to avoid having your valuables lost or stolen is to not take them overseas with you. However, if you do need to travel with valuable items, we recommend you place these items in your carry-on luggage and ensure the bag is locked.
