Insights for consumers
When taking out travel insurance, consumers should be aware that the insurance will not provide cover in every situation, including loss of enjoyment if your travel plans are disrupted. It is important that you have a look at your policy, including the exclusions section, to see what you will and will not be covered for.
What happened?
In 2023, Frankie and his wife Sam purchased a 21-day cruise trip through a travel agency. Halfway through their trip, the cruise ship ran aground and was stuck in the ocean for several days. Once it was freed, the ship travelled with its passengers to a port, that was not on the intended itinerary, for repairs.
Frankie and Sam were able to stay on the cruise ship for the entire 21 days. They did not incur any additional costs for accommodation, food or transport due to the ship running aground, and the cruise company covered the cost of their flights from the port to the location where the cruise was supposed to end. This meant that Frankie and Sam were able to continue with the rest of their post-cruise travels.
As compensation for missing out on half of their trip, the cruise company offered to refund Frankie and Sam $20,000, being half of the amount that they had paid for the cruise. Frankie and Sam accepted, but the cruise company only paid them $10,000 (25% of the total cost of the trip).
Frankie and Sam claimed under their travel insurance for the remaining $10,000 that had been offered by the cruise company but not paid. The insurer declined their claim.
Frankie and Sam complained to FSCL.
What were the parties’ views?
The insurer said that Frankie and Sam had not suffered any financial loss; they were able to stay on the cruise ship and use their accommodation, and they had not incurred any extra expenses because of the ship running aground. The insurer said that Frankie and Sam’s loss was missing out on visiting the locations they were supposed to visit during their cruise, which amounted to a “loss of enjoyment” which was excluded from cover under their policy. The insurer encouraged Frankie and Sam to pursue the cruise company for the remaining $10,000 they had been promised.
Frankie and Sam said that their insurer should cover the $10,000 that the cruise company had not paid, because they had paid for a 21day cruise and had not received what they had paid for. Their view was that the purpose of insurance was to put you in a position had the incident (the ship running aground) not occurred, and if their insurer would not accept their claim, they wondered what the purpose of insurance was.
What was FSCL’s view?
We agreed with the insurer that Frankie and Sam’s loss was a loss of enjoyment, not a financial loss, and was excluded from cover under their policy. We suggested that Frankie and Sam’s best option to recover their money would be to try pursuing the cruise company through the Disputes Tribunal.
What was the outcome of FSCL’s investigation?
Frankie and Sam did not respond after receiving our view, so we closed our file.
