Alan and Evie booked a three-week trip to Russia, departing June 2017. In April 2017, they purchased an insurance policy to cover their trip. A few days before they were set to depart, Evie’s mother (aged 90) fell ill and passed away.
Alan and Evie called their insurer 2 days before their trip was scheduled to start to advise they were cancelling their trip.
Alan and Evie claimed for the cost of their cancelled flights and accommodation, but their insurer declined the claim. Alan and Evie were told their mother died from a pre-existing medical condition, which meant their claim was excluded.
When Alan and Evie asked the insurer to review their decision, the insurer declined their claim again, but gave an extra reason – Alan and Evie’s policy covered cancellation following the death of a relative, but the word ‘relative’ excluded any person over the age of 85. The death of Evie’s mother was not covered under the policy. Moreover, even if their mother was a ‘relative’, there was a general exclusion clause in the policy excluding any claim related to the death of any person aged over 85.
Alan and Evie disagreed with the insurer, and complained to FSCL.
The complaint
Alan and Evie did not think their claim should be excluded by Evie’s mother’s age. The 85-plus exclusion had not been explained to them when they called their insurer about cancelling their trip. They thought their insurer should have told them about the exclusion either before they took out the policy, or when they called to let the insurer know they were considering cancelling their trip.
Alan and Evie also thought it was unfair the insurer did not bring up the 85-plus exclusion when they initially declined Alan and Evie’s claim. If the exclusion was brought up in the insurer’s initial decision, Alan and Evie would have had a chance to respond before the decision was reviewed. Alan and Evie felt this undermined the fairness of the insurer’s review.
Our review
After reviewing Alan and Evie’s policy contract, we found that the words of the 85-plus exclusion were clear. Insurance policies often include special definitions which alter the usual meaning of some words. Further, age exclusions are common in travel insurance policies. We found that excluding persons aged over 85 from the definition of ‘relative’ was not unfair or unreasonable. The insurer was entitled to rely on the exclusion.
The insurer hadn’t raised the exclusion with Alan and Evie before they purchased the policy. However, Alan and Evie were responsible for carefully reading the terms of their policy. Insurance policies have a 14-day ‘cooling off period’, during which Alan and Evie had an opportunity to read through the policy, and contact their insurer about Evie’s mother’s age if they had concerns. We found that it wasn’t the insurer’s responsibility to disclose the exclusion before Alan and Evie bought their policy.
We also found that when Alan and Evie called their insurer about cancelling their trip, the phone operator was not required to tell them about the 85 plus exclusion. The phone call was transactional. Alan and Evie were not asking about their policy, they were letting their insurer know they were making a claim, and asking for the appropriate forms. Asking the phone operator to disclose any potentially relevant exclusions would essentially be asking the insurer to make a decision on the merits of the claim over the phone, and the phone operator couldn’t be asked to provide that level of assistance.
Also, it was not unreasonable for the insurer to bring up the exclusion only when they reviewed their decision. When an insurer reviews their decisions, more consideration will be given to a claim. Often this can lead to the decision-maker relying on different reasons to reach the same conclusion.
In conclusion, we found that the insurer had not breached any of their obligations. They had acted fairly and reasonably, and were entitled to rely on the 85 plus exclusion.
Outcome
Alan and Evie accepted our view, and discontinued their complaint.
Our insight
Insurers aren’t required to discuss all the possible exclusions in an insurance policy with an insured person. It is the insured’s responsibility to thoroughly read through their policy and raise any concerns with the insurer. When reading your policy, you should make sure you are thorough, especially when it comes to exclusion clauses.
