Sally planned a family holiday to Vanuatu during the school holidays. In August 2016 Sally purchased travel insurance to cover her, her husband and three children for the trip from 13 April to 22 April 2017.
On 13 April 2017, Sally and her family were planning to fly from Dunedin to Auckland with a stopover in Wellington. Due to weather conditions, the family’s continuing flight to Auckland was cancelled and all flights from Wellington were suspended.
After calling Air NZ and explaining their predicament the family was rebooked on a flight from Napier to Auckland. In an effort to make this flight the family went straight to the rental car company. When they learnt that there were no rental cars available, the family jumped in two taxis and tried to get to Napier. When Sally’s family were 20 minutes from Napier they were notified that their re-booked flight was also cancelled as the bad weather made its way through Hawkes Bay.
The family decided, at this point, to continue their holiday in New Zealand. In order to do so they rented a car in Napier and drove to Snells Beach near Auckland. The family then returned to Dunedin on their original planned flight from Auckland on 22 April.
Sally sought to claim insurance for
- cancelled flights to Vanuatu
- cancelled Vanuatu accommodation
- the taxi fare from Wellington to Napier
- the additional rental vehicle costs
- the additional accommodation at Snells Beach
- additional food and alcohol in Auckland
- the ‘unused’ domestic flights.
The insurer covered the cost of Sally’s cancelled holiday to Vanuatu in full. The family was reimbursed $4,354.80 for cancelled flights and accommodation. The domestic flights from Dunedin- Wellington- Auckland and Auckland to Dunedin were not coverable because they were, for the purposes of the insurance policy, used.
Sally accepted the declinature of certain aspects of her claim but was not willing to accept the insurance company’s refusal to pay the taxi fares to Napier.
Sally complained to FSCL.
Sally’s view
Sally thought that the declinature of the taxi fare from Wellington to Napier was unreasonable and the insurer dragged out its review of the claim. The family was unable to book another holiday until they were aware of how much the insurer was willing to reimburse them. The claim was submitted on 5 March and the family didn’t receive settlement until 4 July.
Sally did not think it was up to the insurer to decide what was reasonable in the circumstances. The family had to make decisions quickly and didn’t have time to read the policy’s fine print. Sally said the family took the taxi in good faith in an attempt to make the flight.
Sally believed the insurer was making the family feel bad for fighting for what was ‘rightfully theirs.’ She reasoned that because the family were out of pocket they deserved to be reimbursed for the expenses used in attempting to make the flight.
Insurer’s view
The insurer said it was unable to cover the cost of the holiday in Snell’s Beach because it was the family’s decision to arrange an alternative holiday. The food and alcohol claimed for was not an additional expense incurred as a result of cancellation because the family would have budgeted for it in their original plans in Vanuatu.
The insurance claim arose from a single weather event. The policy wording stated a claim can only be made for the same event under either
‘Cancellation of Journey,’
‘Missed connection,’ or
‘Travel delay.’
As a result, the insurer declined to cover the costs of the taxi (under the ‘missed connection’ head of the policy) in favour of ‘cancellation of journey.’ Because the insurer could only pay under one head of the policy, it chose to reimburse the family for the cancelled flights and accommodation (which was the higher of the two sums claimed for.)
The insurer commented in its review of the claim, had the family made it onto the flight in Napier, the taxi fares would have been covered because there would have been no ‘cancellation of journey’ claim.
Review
Although Sally was out of pocket, we found that the insurer had correctly applied the wording of the policy. The policy stated that a claim could be made under either ‘cancellation of journey’ or ‘missed connection,’ rather than both. Although we had sympathy for Sally’s situation, in pursuing every possible avenue in a short space of time to make the connecting flight, insurance policies are contracts. As a result, the insurer must give effect to the wording of the policy. In this instance it did so correctly.
Key insight for consumers
Whilst many may consider this type of situation the exact reason you obtain travel insurance, the extent of cover depends on the wording of the policy. Because time may be of the essence in circumstances like these, it is important to familiarise yourself with the policy wording prior to travelling. If in doubt, contact your insurer for assistance to check your policy entitlements.
