Unforeseen surgery for unseeable cancer: Travel insurance claim declined when further treatment required

Nigel and Pam book a cruise

Nigel and Pam booked to go on a cruise around Europe with Suave Cruises departing in June 2014.

On 7 December 2013 a lump on Nigel’s hand was diagnosed as melanoma. The melanoma was excised on 19 February. Nigel attended a follow up appointment on 11 March. He was told by his surgeon that the possibility of a second surgery was going to be investigated. However, at this time the surgeon also told Nigel that it was unlikely a second surgery would be required as roughly all of the excisable hand tissue had been taken.

On 4 March Nigel and Pam’s travel insurance through TOP Insurance (“TOP”) was activated. Pam and Nigel received complimentary travel insurance with TOP when they booked overseas travel using their bank credit card. The insurance was activated once Nigel and Pam had paid over 50% of their pre-paid travel expenses. 

On 17 April Nigel attended a clinic with a plastic surgery specialist. The surgeon told Nigel that he recommended a second surgery because his excised tumour had cancer cells at its deeper edge. Nigel had the second operation on 21 May. The operation was a success but because the surgery removed some of his tendons, Nigel required rehabilitation. Nigel’s surgeon advised Nigel not to travel.

Nigel and Pam made a claim to TOP for the cancellation cost. TOP declined their claim.

 

TOP’s view

TOP said Nigel and Pam’s claim was declined because the policy only covers cancellation for unforeseen sickness or events. TOP argued that Nigel’s second surgery was not unforeseen as after the date of diagnosis of a melanoma on 7 December it was foreseeable that ongoing treatment may be required.

TOP also said that Nigel and Pam’s claim was a claim for a pre-existing condition because the melanoma had been diagnosed before the insurance policy was activated on 4 March. TOP considered that any claim for a pre-existing medical condition was excluded under the policy’s pre-existing condition exclusion clause.

TOP argued that Nigel and Pam should have mitigated their loss by cancelling the cruise at an earlier date and receiving back 50% of the amount paid to Suave Cruises.

 

Nigel and Pam’s view

Nigel and Pam argued that TOP had incorrectly declined their claim for cancellation costs. Nigel and Pam said that the second surgery was unforeseen. On 4 March, when they paid over 50% of their pre-paid expenses and activated TOP’s insurance policy, they thought Nigel’s first surgery had been a success. It was not until 17 April that Nigel was told he would definitely require a second surgery. 

 

FSCL’s view

We found that TOP was not entitled to decline Nigel and Pam’s claim.

Prior to 17 April there was no medical evidence to suggest that Nigel knew or expected that he would definitely need further surgery. The policy covered cancellation costs due to an unforeseeable sickness or due to an unforeseeable event. Unforeseeable in the context of TOP’s policy meant “sudden, unexpected, and unintended”.  The event that caused Nigel and Pam to cancel their trip was the requirement for and timing of the second surgery and the length of the recovery time from it. We found that the surgery and the recovery time were unforeseeable events beyond Nigel and Pam’s control.

We also found that TOP’s pre-existing medical exclusion clause did not apply to Nigel and Pam’s claim. The pre-existing medical clause read, “We will not pay for: Any pre-existing medical condition”. However, Nigel and Pam were not claiming for the costs of treating a pre-existing medical condition. They were claiming for cancellation costs. In our view, the pre-existing medical condition exclusion clause was not wide enough to exclude cover for cancellation costs incurred by Nigel and Pam in the circumstances of their claim. The clause only excluded cover for the costs of a pre-existing medical condition itself, not for cancellation costs arising as a result of a pre-existing medical condition.

Nigel and Pam did not miss the opportunity to mitigate their loss by cancelling the cruise earlier. Under Suave Cruises’ terms and conditions, to receive a 50% refund Nigel and Pam would have needed to cancel on or before 12 April. As Nigel was not told until 17 April that a second surgery was required, the date had passed for Nigel and Pam to receive a 50% refund from Suave Cruises.

We formally recommended that TOP pay Nigel and Pam’s claim up to the maximum amount provided for under the policy less the excess, a sum of $19,800.