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The Hangover

While visiting Las Vegas, Hugo met a group of strangers in his hotel bar. After enjoying several drinks together, Hugo invited them to his room where they continued to drink. At some point in the evening, Hugo fell asleep. When he woke up, the strangers had left and he was missing US$1,500 in cash, clothing worth $2,000, sunglasses worth $800, and a $3,000 watch taken from his wrist. Hugo reported the theft to the local police, but was unable to identify the people he had been drinking with the night before.

Hugo returned to New Zealand and lodged an insurance claim. His insurer declined the claim, referring to the policy which obliged Hugo to “take all reasonable precautions to protect the property insured by this policy and to prevent any claims arising”. Hugo’s insurer said that by inviting strangers into his hotel room and falling asleep, Hugo had failed to take reasonable precautions to protect the insured property. The insurer also pointed out that there was no cover for loss caused by anyone lawfully in the insured person’s accommodation.

Unhappy with this response, Hugo complained to FSCL.


In Hugo’s view, his policy covered the theft of money from his hotel room while he was present. He also queried what more he could have done to protect his watch, given it was stolen from his wrist.


After receiving the insurer’s response to Hugo’s complaint, we discussed with Hugo whether he felt he had taken all reasonable care to protect his property. We were concerned that drinking with strangers, inviting them back to his hotel room and falling asleep compromised Hugo’s ability to protect his possessions. Hugo acknowledged his complaint was unlikely to succeed, but asked to see the insurer’s response.


We sent the insurer’s response to Hugo, but did not hear back. We assumed Hugo had decided not to pursue his complaint and closed our investigation.

Had we had to issue a decision on this case, we would have agreed with the insurer that, in the circumstances, Hugo had been careless in inviting relative strangers back to his room. The fact the policy excluded loss caused by a person lawfully in Hugo’s room also meant Hugo’s claim could not succeed.

Our insight

While insurance is designed to protect a person from accidental loss while travelling, the insured is still obliged to take reasonable care to avoid loss. Alcohol can diminish a person’s awareness of risk and lead to situations where it is valid for an insurer to decline a claim because the insured hasn’t taken reasonable care of their possessions.