No return ticket, no insurance cover

Sophie goes to Australia without a return ticket to New Zealand

Sophie booked a flight to Australia for 16 June 2014. After Sophie arrived in Australia she then purchased a flight back to New Zealand for 13 July 2014.

While Sophie was in Australia her iPad’s screen was damaged.

Sophie received complimentary travel insurance with ECO Insurance (“ECO”) when she booked overseas travel using her bank credit card. Sophie made a claim to ECO for the cost of the iPad. ECO declined Sophie’s claim because she had not met ECO’s eligibility criteria to receive insurance cover.  


Sophie’s view

Sophie said that when she first received her credit card from her bank she also received a booklet from ECO. ECO’s booklet contained the terms and conditions for the complimentary travel insurance attached to her credit card. Sophie argued that nowhere in ECO’s booklet was it mentioned that a return ticket must be held before leaving New Zealand to be eligible for cover.

Sophie said that she did not receive any notification from ECO or her bank that the policy wording had changed. When Sophie travelled to Australia she believed the terms and conditions in ECO’s booklet were still the applicable terms and conditions.


ECO’s view

ECO confirmed that under its previous terms and conditions it was not a requirement that the customer holds a return ticket before leaving New Zealand. However, ECO said that the new terms and conditions took effect from September 2012 and included the requirement for a return ticket to be purchased before departure. ECO said that notification of the new policy wording and where it could be obtained was sent to all cardholders by the bank.


FSCL’s view

In our view, the insurance policy wording clearly stated that customers were only eligible for cover under the policy if return flights were booked before leaving New Zealand. We found that ECO was entitled to decline Sophie cover under the policy as, essentially, there was never any contract of insurance in place between Sophie and ECO.

It was unfortunate that Sophie did not receive notification from her bank that the policy wording had changed and, as a result, was unaware of the requirement that a return ticket must be booked before leaving New Zealand. However, it is standard industry practice for an insurance company to set out the terms and conditions under its insurance policy. It is then up to the customer to read the policy and understand those terms and conditions. If the circumstances of a customer’s claim do not meet those terms and conditions for cover to be provided, the insurance company is entitled to make a decision based on those terms and conditions.

We found that ECO acted reasonably in declining Sophie’s claim and recommended that Sophie discontinued her complaint against ECO.

As Sophie had complained that she did not receive any notification of the changes from her bank, we suggested she contact the Banking Ombudsman if she wished to pursue this complaint.