Policy sections material for clothing claims

Lindsey and Barbara booked a 20 day cruise around the Caribbean. The cruise departed from Fort Lauderdale.

On 19 October 2015, Lindsey and Barbara flew from Los Angeles to Fort Lauderdale. When they arrived at Fort Lauderdale, Lindsey’s bag could not be located. They reported the missing bag to the airline.

The cruise was to depart midday on 21 October 2015 so on 20 October 2015, Lindsey went shopping to buy clothing to take on the cruise. In total, he spent $1,587.18USD on new clothes.

On 13 November 2015 Lindsey and Barbara returned to New Zealand from their holiday. The airline had been unable to locate Lindsey’s bag. To compensate, the airline paid them $4,686.74NZD.


The claim

Lindsey and Barbara calculated that the clothes in Lindsey’s missing bag totalled $7,201.69NZD. They submitted a claim to their insurance company for this amount.  


Claim partially accepted

The insurance company found that Lindsey and Barbara were entitled to receive the maximum amount under the policy’s ‘Emergency Baggage’ benefit. The maximum amount under this benefit was $1,500NZD and the excess applied was $200. The insurance company paid Lindsey and Barbara $1,300NZD.

Lindsey and Barbara believed they were still out of pocket and that the insurance company should pay their full claim. Lindsey and Barbara complained to FSCL.


Our view

Under Lindsey and Barbara’s insurance policy, there was cover for lost baggage up to a maximum of $30,000. However, the policy section provided: “proof of purchase and ownership will be required to support any claim over $500”.

Lindsey and Barbara had only been able to provide proof of purchase for $1,603.07 worth of items. This meant that the maximum Lindsey and Barbara would be able to receive under the policy’s ‘Personal Baggage’ benefit was $1,603.07NZD.

The policy also included a general condition which read:

This policy will not provide cover for any loss or expense covered under any other insurance policy, compensation scheme or legislation. You must first seek settlement of your costs under that policy or scheme. We will then only consider payment of any difference between the amount settled and the payment you would have been entitled to under this insurance.

This general condition meant that the insurance company was only liable to pay Lindsey and Barbara the difference between what they were entitled to receive under the policy and what they had already received from the airline.

In the event that Lindsey and Barbara had been able to provide proof of purchase for all $7,201.69NZD worth of items, then they would have received the difference between this amount and what they received from the airline, a sum of $2,514.95NZD.



We explained to Lindsey and Barbara how the policy sections applied in the circumstances of their claim. While they were disappointed with the outcome of their complaint, they were still pleased that they had received money from the airline and the money from the insurance company for Lindsey’s emergency clothing.

Lindsey and Barbara said they had learnt a lot about how insurance works from this experience, In particular, how strictly insurance companies will apply their policy wording.