Nisha and her husband Mahendra booked a holiday to Australia on 19 October 2019 and purchased travel insurance. They were due to travel to Australia on 16 November and return on 20 November 2019. However, on 11 November, Mahendra’s father was unexpectedly admitted to hospital because of suspected lung cancer, and by 15 November his condition had become critical.
Nisha and Mahendra cancelled the holiday, so they could be with Mahendra’s father. He deteriorated further and died in December 2019. Nisha and Mahendra made a claim to their travel insurer to cover the costs of their cancelled trip ($3,500).
The insurer declined the claim because they said that Mahendra’s father’s lung condition was pre-existing. They said some of the medical evidence suggested that Mahendra’s father had known about his illness and received medical treatment prior to Nisha and Mahendra booking their trip. The insurer said a policy exclusion stating that there would be no cover for a pre-existing medical condition of the insured, or anyone on whom the travel depended, applied in Nisha and Mahendra’s case, and the claim was not covered.
Nisha and Mahendra thought the insurer had incorrectly declined their claim and they complained to FSCL.
Dispute
Nisha and Mahendra said that the insurer had incorrectly interpreted the evidence about Mahendra’s father’s sickness and death. They said his unexpected hospitalisation, deterioration, and death were unforeseeable. They said that prior to Mahendra’s father’s hospitalisation he was fit and healthy, working in a physical job, and had no known health issues.
The insurer maintained their view that Mahendra’s father had a pre-existing medical condition and that the exclusion applied.
Review
When we reviewed the pre-existing medical condition exclusion clause, we saw that we did not actually need to determine whether or not Mahendra’s father’s condition was pre-existing. A careful reading of the policy revealed that the pre-existing medical condition exclusion only excluded claims for an actual pre-existing medical condition. It did not exclude claims arising out of a pre-existing medical condition.
Nisha and Mahendra’s had claimed for cancellation costs. They had not claimed for the costs of treating any pre-existing medical condition (for example, if someone incurred medical treatment costs when travelling overseas). This meant the exclusion didn’t apply to their claim.
Resolution
We wrote to the insurer and suggested they pay Nisha and Mahendra’s claim. The insurer agreed, and the complaint was resolved.
Insights for participants
This complaint is a good reminder for insurers to ensure they carefully consider exclusion clause wordings before declining claims and make sure they are applying the correct exclusion. Although there are often subtle differences in the way exclusion clauses are worded, those subtleties can be the difference between a claim being paid or not.
