What caused the cancellation?
In early 2016, Brian and Kate bought travel insurance for three trips they were due to take that year.
Brian suffered an ‘eye stroke’ on 18 April 2016 and then cancelled his and Kate’s trip to Thailand on which they were due to depart on 19 April 2016.
Following Brian’s discharge from hospital soon after 18 April 2016, Brian suffered an ongoing period of delirium and he and Kate cancelled their travel to Australia booked from 19-24 May 2016, and to America from 7-29 June 2016.
On 9 May 2016, Brian and Kate submitted a claim for their cancelled trip to Thailand, which the insurance company paid in full.
On 7 June 2016, Brian and Kate submitted a claim for approximately $30,000 for the cancelled Australian and American trips. However, these claims were declined.
The insurance company declined the claims on the basis of a general exclusion clause in its policy stating that:
“We will not pay under any section of this policy for any claim arising directly or indirectly out of: …
- Insanity, any psychological, psychosomatic, nervous or mental condition….”
Brian and Kate complained to FSCL.
The complaint
Brain and Kate complained about the insurance company’s decision to decline their claims for cancellation costs incurred when they were unable to travel to Australia in May 2016, and America in June 2016. They were of the view that the exclusion clause did not exclude cover for their claims because it was Brian’s eye stroke (which is not a psychological condition) which primarily caused them to cancel the trips, not his delirium.
Review
Upon the evidence we were provided with in the first instance, it was our preliminary view that the complaint against the insurance company should be discontinued based on general exclusion 9.
Even if Brian’s delirium was not the primary cause of the loss, it was of no consequence, because under the exclusion clause, as long as delirium caused or contributed to the loss (which it did), the exclusion clause applied.
New evidence
Brian and Kate said they understood how we had reached our preliminary view, but that Brian’s eye stroke in and of itself would have prevented them from travelling to Australia and America.
We contacted Brian’s opthalmologist and asked whether Brian’s eye stroke, in and of itself, would have meant Brian would have been unfit to fly/travel to Australia and America, on the dates indicated above.
The opthalmologist said that it was unwise for Brian to travel overseas after he had an eye stroke and it was reasonable from a medical point of view to have him cancel all planned international travel for two reasons:
- he had lost vision in one eye causing balance issues, and
- there was concern that further problems could develop while travelling which could cause severe pain and distress.
Outcome
We sent the new evidence to the insurance company and said in our view it supported a finding that the claim should be paid. Because the eye stroke in itself prevented Brian from travelling, the exclusion clause relied on by the insurance company became redundant.
The insurance company agreed with our view and paid Brian and Kate $20,000 (the maximum cover for cancellation costs under the policy) in full and final settlement of their complaint.
