What happens if I’m not aware of my insurance policy?

In February 2014, Mei paid her first instalment of course fees for Auckland University. An international student in New Zealand is required to have insurance. In order to ensure compliance, insurance is factored into an international student’s course fees. International students become eligible for cover under the University’s group policy, though they may opt out if they arrange their own insurance.

The university’s insurer sent Mei an email about the insurance cover provided with a link to the policy wording on 16 April 2014. The same email was sent at the start of the second semester as well as both semesters during 2015, and again around March 2016.

In January 2016 Mei’s flat was burgled and she made a claim under her insurance policy for her stolen possessions. The substantial value of Mei’s claim ($15,000) caused the insurer to investigate further. The insurer eventually declined Mei’s claim because of the contents of the police report into the burglary. The police report stated that, as there were no signs of forced entry, the burglar’s likely entry point to the flat was an unlocked ranch sliding door on the second story. The policy excluded claims “for items stolen from unlocked or unattended buildings.”

Mei’s flatmate, who also had possessions burgled (albeit far less valuable items) had her claim accepted. This confused Mei. She believed, given they were both international students, and living in the same flat, their cover would be the same.

When Mei’s insurance claim was declined, she complained to FSCL.

Mei’s view

Mei was distraught the insurer would not cover her claim. Mei thought that the information the insurer provided to international students was deficient. Mei believed that the insurer should have done a better job at ensuring that those who were insured knew the content of their policies. Mei said that the insurer ‘tricked’ international students and ‘forced’ international students into the specific policy because she only received notice of her policy entitlements after the insurance had begun. Mei argued that she should have been provided with a range of insurance policies/ insurers to choose from.

The insurer’s view

As a matter of course, upon registration at the university, international students were given a brochure outlining their insurance entitlements in their ‘welcome pack.’ In addition to that, seminars were held during orientation week which were designed to fully inform international students of their policy rights. Attendance was not compulsory. Furthermore, every time an international student re-registered (i.e. each semester) they were sent an email providing a link to the website along with the policy wording. Therefore, even if Mei believed she had been ‘locked into’ the policy for 2014, when she paid her fees for 2015, and received new notice of her coverage (via email), Mei could have opted out.

Outcome

It was clear that the insurer was entitled to decline Mei’s claim because a door had been left unlocked. There was a clear policy exclusion for goods stolen from an unlocked building.

We found that, ultimately, Mei was responsible to review the insurance policy prior to enrolment by accessing the policy wording through the emails sent to her or through the university’s website. The insurer had provided numerous opportunities for Mei to read her policy and Mei could have reviewed her policy several times prior to the burglary. We also noted that Mei was unlikely to have received coverage for her claim, had she been with another insurer.

Mei’s flatmate’s much smaller claim was accepted. Although confusing for Mei, insurers are within their rights to accept some claims without waiting for a police report or launching a full investigation into the circumstances of the burglary.

Key insights for consumers

It is important to be familiar with your insurance policy and the policy’s exclusions. Not knowing the content of your policy, when you have been provided various opportunities to read it, will not mean the insurer’s decision to decline a claim will be overturned.