In April 2015 Steve purchased a travel insurance policy for his trip to China between 25 May and 6 July 2015. While at a bar in Shanghai on 4 July 2015, Steve was taken into a room by some people in the bar and was forced under duress to make a transaction using his credit card totalling $2,500. Steve was forced to sign a credit card voucher as opposed to entering his PIN.
The insurer declines the claim
Steve submitted a claim to his insurer for the $2,500. The insurer initially declined Steve’s claim because the policy did not provide cover for stolen cash. Steve asked his insurer to review the claim, pointing out there was cover under the policy for the fraudulent use of lost or stolen credit cards (the credit card clause).
The insurer reviewed Steve’s claim, but maintained the decline. The insurer said that Steve’s card had not been ‘lost’ or ‘stolen’.
In addition, Steve had not reported the theft to the police. The insurer highlighted an exclusion in the policy saying it would not pay a claim where the loss or theft of a credit card is not reported within 24 hours to the police (the police exclusion clause).
Steve said he did contact the Shanghai police to try and report the theft/extortion. However, the police said the name of the entity on the credit card transaction was a common Chinese name, and could be anyone and anywhere in Shanghai.
Steve considered the credit card clause to be explicit, and that he should be entitled to have his claim paid under that section. Steve complained to FSCL.
We said the police exclusion clause was clear and the insurer was entitled to rely on it. Unfortunately, although Steve reported the unauthorised use of his card to his bank within 24 hours, there was no documentary evidence of him reporting the matter to the police within 24 hours.
In addition, we said that even if Steve had been able to provide written evidence of him making a police report, there was no guarantee he would have been entitled to a reimbursement from his insurer. The credit card clause said that the credit card had to be ‘lost’ or ‘stolen’. Technically, Steve’s card was not lost or stolen, however we accepted that the money obtained through the alleged fraudulent use of the card was stolen.
In order to uphold Steve’s complaint, we would have had to be satisfied, on the balance of probabilities, that the money was stolen from Steve and/or obtained under duress. Unfortunately, there was no independent evidence of this.
We noted Steve’s bank was unable to find that fraud had occurred, though it accepted the circumstances could have amounted to ‘extortion’. However, ‘extortion’ was not covered by Steve’s credit card’s terms and conditions, or by his travel insurance policy.
We found that on a strict reading of the policy, there was no cover even if Steve had been able to prove he had reported the incident to the police within 24 hours. Although we appreciated it may seem unfair that Steve’s insurer declined the claim, it was entitled to do so under the policy.
Although disappointed, Steve decided to discontinue his complaint.
Our role is to look at the circumstances of the claim and determine on a balance of probabilities whether the policy wording provides cover, or not. Often there is no documentary evidence available to travellers to ‘prove’ their claims. This is unfortunate, but when we weigh the available evidence in those circumstances, we may find the claim should not be covered.