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Why is my insurance punishing me for being a good mother?

Cedric and Veronica decided to book a trip to visit their 8-year-old grandson in Australia.

Weeks before Cedric and Veronica were scheduled to leave they got a phone call from police who told Veronica they had their 21-year-old son Ronnie in custody and were taking him to hospital. Ronnie had been out celebrating a friend’s 21st and had become very intoxicated, resulting in a large cut to his forehead.

Cedric and Veronica did not know what had come over Ronnie. He had never been in any trouble, seemed low and was refusing to talk about what happened. Veronica took Ronnie to their GP who said it appeared that Ronnie was depressed. The GP referred Ronnie to a counsellor.

Because Cedric and Veronica were not yet sure what was going on with Ronnie, they cancelled their trip and decided to claim insurance for the cost of their flights to visit their grandson in Australia.

While Cedric and Veronica’s insurance policy allowed them to claim for unforeseen events which caused them to cancel their trip, the insurer declined the claim. The insurer relied on a general exclusion clause in the policy which stated it would not pay if a claim was in any way related to depression or anxiety.

Cedric and Veronica complained to FSCL.


Veronica’s view

Veronica thought that their claim might be payable because, although it had appeared Ronnie was depressed, his subsequent improvement showed this was a temporary low rather than ‘clinical depression.’


Insurer’s view

The insurer declined the claim because the insurance policy excluded claims arising from, or in any way related to depression. Ronnie’s discharge summary and medical certificate from the doctor stated it appeared Ronnie was depressed. As a result, the insurer believed that Ronnie’s situation (and the reason for Cedric and Veronica cancelling their trip) was related to depression even if a formal diagnosis was not provided. 



Unfortunately for Cedric and Veronica, after reviewing the evidence we agreed with the insurer. Although there was no clinical diagnosis, the travel policy’s exclusion clause was very wide and excluded any claim related to depression.


Key insight for consumers

An insurance policy is a contract and we must give effect to the policy’s terms. Because the policy was worded in such a broad manner so as to exclude claims in any way related to depression, the insurer correctly declined the claim.