Jason booked an overseas family holiday to Florida and paid a USD $1,645 deposit to rent a villa as part of the holiday. Unfortunately Jason’s grandson in the United Kingdom, Myles, who was born with a heart condition, required hospitalisation for his illness. Jason had to cancel his holiday and travel to the United Kingdom to be with Myles and his family.
Jason had taken out Worldwide Travel Insurance with BHB Insurance and made a claim under his policy for his lost deposit.
BHB Insurance’s position
BHB Insurance’s policy provided cover for loss deposits but not if the loss was brought about by something that happened to a relative living outside New Zealand. As Myles lived in the United Kingdom, BHB Insurance declined Jason’s claim. BHB Insurance’s reasons for excluding cover for loss associated with persons living overseas were:
§ it would result in increased premiums
§ BHB Insurance only deals with New Zealand demographics and risks and could not price cover for relatives living outside New Zealand, and
§ the majority of New Zealand residents do not require cover for relatives living outside of New Zealand.
BHB Insurance also excluded losses that arise from “Pre-Existing Medical Conditions”. BHB Insurance considered Myles’s illness to be a “Pre-existing Medical Condition” so Jason’s loss could also be excluded under this clause.
Jason thought BHB Insurance’s reasons for excluding losses arising from overseas relatives were “nonsense”. He argued that his travel insurance was of limited value if he could not claim cancellation costs for his overseas travel where that cancellation is brought about by the circumstances of a relative living overseas. Jason also argued that restricting cancellation cover to only relatives living within New Zealand had no place in a travel insurance policy that is marketed as a “Worldwide” travel insurance policy.
We agreed that it was reasonable for Jason to cancel his travel plans. We also agreed that many New Zealand residents have relatives residing overseas and may have to change travel plans if anything unexpected happened to those relatives. However, we had to apply the terms of the travel insurance contract that Jason entered into with BHB Insurance. The policy provided specific exclusions for relatives living outside New Zealand and pre-existing medical conditions. We found that BHB Insurance had validly declined Jason’s claim.
We also found that the policy was not misrepresented by BHB Insurance by being call a “Worldwide” policy, as “Worldwide” referred to the travellers’ destination.
We recommended that Jason withdraw his complaint.
Jason’s complaint highlights the importance of reading the full terms of a travel insurance policy before taking out travel insurance. Clauses excluding cover for losses brought about by overseas relatives and pre-existing medical conditions are not uncommon. Had Jason read his insurance policy he would have been aware that BHB Insurance’s policy would not cover all unexpected events.