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ombudsman news

issue 56

September/October 2006

complaints about travel insurance

As the summer holidays come to an end, we can usually expect to see a slight rise in the number of travel insurance disputes referred to us. In this article we outline some of the main causes of these disputes, and provide case studies illustrating our approach.

Travel insurance is generally bought as a standard package to cover (subject to specified limits and exclusions) a wide range of risks. Commonly, these include events such as:

  • the cancellation or curtailment of a trip
  • expenses due to a delayed departure or loss of baggage
  • medical emergencies
  • loss or theft of money, a passport or personal possessions
  • personal accidents and
  • personal liability.

Sold either as a single-trip policy, an annual multi-trip policy, or an "ongoing" policy (often linked to a bank account or credit card), travel insurance can cover business or leisure travel. It may be effective worldwide or limited solely to travel within the UK or another specific geographic area.

Complaints about travel insurance represent about 12% of all the insurance complaints we receive. In most of these disputes:

  • the trip was cancelled or curtailed because of the illness, injury or death of one of the travellers or of a close relative
  • one of the travellers was hospitalised during the trip and incurred medical expenses or
  • money, a passport or baggage belonging to one of the travellers was stolen or lost during the trip.

The disputes often centre on:

  • whether or not a particular event was covered by the policy and
  • the impact of exclusion clauses for pre-existing health conditions.

When dealing with travel insurance disputes, we will examine the relevant policy wordings, as the law and the Insurance Conduct of Business Rules require. We will also review all other available evidence, such as medical reports, police reports, claim forms etc, to determine whether the insurer's decision was fair and reasonable, in all the circumstances of the case.

Exclusions, for example those relating to pre-existing medical conditions, play an important role in defining the cover provided. Our general approach is that exclusions are not inherently unfair or unreasonable, provided the customer is made aware of their existence and scope at the time the policy is sold.

In disputes involving policy exclusions, we will take into account any advice that the seller of the policy may have provided. We will also consider whether or not any unusual and significant exclusions or limitations in the policy were drawn to the customer's attention.

The following case studies illustrate some of the more common types of travel insurance disputes referred to us.

case studies

complaints about travel insurance

56/1
travel insurance - whether cancellation caused by events outside the policyholder's control

In mid-April Mr G, an investment banker, visited his local travel agent and booked a week's holiday to Moscow, departing three months later, on 16 July. At the same time, the travel agent sold him travel insurance to cover the trip.

Five days before the holiday, Mr G realised that he had not yet obtained a visa. He knew this shouldn't be a problem because, for an additional fee, the Russian consulate offered a "fast track" service with a 24-hour turn-around.

As he was very busy at work, Mr G gave the completed visa application to his mother and asked her to send it off for him. Unfortunately, Mrs G enclosed the fee for the 3-5 working day turn-around, not for the "fast track" service her son needed.

Becoming extremely anxious when - the day before his holiday was due to start - the visa had still not arrived, Mr G phoned the Russian consulate and Royal Mail. Neither could help him, so he called round to see the travel agent.

The travel agent told Mr G he would be able to claim a 50% refund from the insurer if he cancelled the holiday immediately - but would get nothing if he left it any later. Mr G cancelled.

Half an hour later he got home to find the visa had arrived. It was too late to reinstate his booking. And in due course the travel insurer told him he was not entitled to claim back any of the money he had paid for the holiday. The insurer pointed out that Mr G was only covered if he was forced to cancel for reasons beyond his control. It did not consider his failure to obtain a visa in time to be a matter outside his own control.

Mr G disputed this - saying that the cancellation had been caused by "an unforeseeable mix-up" between him and his mother - and that this "mix-up" had been outside his control. When the insurer rejected Mr G's complaint, he came to us.

complaint rejected
We looked at the wording of Mr G's policy. Under the heading, "cancellation cover - what you are covered for", it said:

"If you have to cancel or curtail your trip through your inability to travel for reasons beyond your control following an event that happened after the commencement date of this Certificate we will pay up to the amount shown above in respect of ... travel costs which you have paid or are contracted to pay and which you cannot recover from any other source ...".

It was clear that Mr G's reason for cancelling the holiday was not outside his control. He had left it until the week before his departure before applying for his visa. And he had then chosen to delegate to his mother the task of arranging payment and sending off his application. In our view, it was his responsibility to ensure the correct fee was enclosed with his application. We rejected the complaint.

56/2
travel insurance - whether insurer should pay curtailment claim when policyholder was taken ill but did not return home before scheduled end of the holiday

In April 2003, while on a cruise with his wife to celebrate their silver wedding, Mr B tripped on some steps and broke his leg. After his leg had been put in plaster, Mr B was prescribed strong painkillers and spent the remainder of the cruise - a total of 11 days - in his cabin.

When the couple returned home, Mr B submitted a claim under his travel insurance policy for medical expenses and for the curtailment of his and his wife's holiday. The insurer settled the medical expenses claim. However, it rejected the curtailment claim in its entirety, on the grounds that Mr and Mrs B had not left the ship and returned home before the scheduled end of their holiday.

After Mr B disputed this decision, the insurer agreed to meet half of the curtailment claim. It paid the cost of the final 11 days of the cruise (less the policy excess) - but only for Mr B, not for his wife.

Mr B said the insurer should pay for his wife as well, because after his accident she had remained in the cabin to look after him. However, the insurer disagreed, so Mr B came to us.

complaint rejected
The travel policy provided cancellation cover "... if you are forced to curtail your trip and return home after departure as a direct and necessary result of any cause outside your control...".

There had been no medical reason for Mr B to leave the ship and return home before the end of the cruise. He and his wife would have preferred to return home, but this was not the same as being forced to do so. We were satisfied that the insurer's payment of half of Mr B's curtailment claim was fair and reasonable, and we rejected the complaint.

56/3
travel insurance - whether an insurer correctly relied on policy exclusion to refuse cancellation claim resulting from policyholder's ill-health

Mr K occasionally suffered from migraines but was otherwise in excellent health. So he was somewhat concerned when, for no apparent reason, he collapsed and briefly lost consciousness.

He soon recovered but "just to be on the safe side", as he later told us, he made an appointment with his GP. Mr K saw the doctor four days later - on 30 August 2005 - and told her he had felt perfectly well until immediately before he passed out. At that point he had started to feel dizzy and had then found himself unable to stand.

The doctor told Mr K that his collapse had in all probability been related to a migraine. However, the doctor thought it would be a sensible precaution to have a brain scan, just to rule out any possibility that Mr K might have had a minor stroke.

In her referral letter to the hospital, which we later asked to see as part of our investigation, the doctor stressed that she did not think Mr K had suffered a stroke. But she said she wanted Mr K to have the scan in order to "completely rule out this possibility".

Mr K's appointment for the scan was on 27 September 2005. A couple of weeks before this - on 14 September - he booked and paid for a holiday and bought a travel insurance policy. The holiday was to start on 30 September, a few days after he was due to have the scan.

The result of the scan came back on 28 September and revealed that Mr K had suffered a minor stroke. His doctor told him he should not fly for at least three months, so Mr K cancelled his holiday.

The insurer rejected the claim Mr K made under his travel insurance policy. It pointed out that the policy contained an exclusion from cover for:

"... any condition of which the policyholder was aware at commencement of the policy or for which he received advice, treatment or counselling from any registered medical practitioner during the 12 months preceding the commencement date, whether diagnosed or not".

complaint upheld
There was clear evidence that - at the time Mr K had taken out the policy - both he and his doctor had thought that the dizziness and resultant collapse had been caused by a fairly minor ailment - not by a stroke.

So we told the insurer that it its reliance on the policy exclusion in order to reject the claim was neither fair nor reasonable. And citing the legal case, Cook v Financial Insurance Co Ltd [1998] 1 WLR 1765, we told the insurer that it had not acted in accordance with the law.

We said the insurer should meet Mr K's claim, less any excess, and pay him interest from the date of the cancellation. We also said it should compensate him for the distress and inconvenience he had been caused.

56/4
travel insurance - whether insurer correct in refusing to pay repatriation expenses for policyholder taken seriously ill on holiday

Mr C, a 45-year old landscape gardener, was taken seriously ill while on holiday in West Africa. It was clear that he would require major surgery. And it seemed probable that he would need a blood transfusion during or after the operation.

The treating doctor thought Mr C should be flown home to the UK for the operation, despite the risk that he might suffer further problems while waiting for this to be arranged - and during the flight itself.

Mr C contacted his insurer to explain his predicament. He asked for assistance in arranging his flight home but the insurer said it could not help. It insisted that flying was too risky for him.

The doctor treating Mr C had provided an oral assurance that Mr C was fit to fly, and had explained why repatriation was in his best interests. But the insurer said it would need a written report to this effect before it could reconsider the matter.

Mr C argued, unsuccessfully, that the insurer's insistence on a written report was unreasonable, bearing in mind the urgency of the situation and the doctor's view that it was in his best interests to be repatriated. Anxious not to delay matters any longer, Mr C arranged and paid for the flight home himself.

Once Mr C had recovered from his operation, he complained to the insurer about its handling of the matter. The insurer rejected his complaint, arguing that its representative had acted in Mr C's best interests because she genuinely believed he had not been fit to fly home.

complaint upheld
In medical cases, the evidence of the treating doctor is normally very persuasive. The doctor is generally best placed to assess their patient's situation at the time the problem arises. This was such a case, and we agreed with the treating doctor's assessment of the risks in flying Mr C home, when set against the risks associated with carrying out his operation in West Africa.

The doctor who subsequently operated on Mr C in the UK confirmed that, in the circumstances, it had been the best course of action for Mr C to return home for surgery. Most medical facilities in West Africa are still fairly basic. And the risk of contracting HIV as a result of a blood transfusion is much higher there than in countries where there is an effective donor-screening programme.

We felt that in this particular case the insurer's insistence on a written report had been unreasonable. The Insurance Conduct of Business Rules state that an insurer should not reject a claim on the basis that a policy condition (such as having to provide a written report) has been breached, unless the circumstances of the breach are connected to the loss. In other words, the insurer's position must have been prejudiced as a result of the breach.

Since the treating doctor in Africa had given an assurance that repatriation was in Mr C's best interests (even though he had not put this in writing), we did not think it a material factor that Mr C had not provided the insurer with a written report.

We upheld the complaint and required the insurer to reimburse Mr C for the expenses he had incurred in returning to the UK. We also said it should pay him a significant amount for the distress and inconvenience he had experienced because of its refusal to assist with his repatriation.

56/5
travel insurance - whether insurer right to reject policyholder's cancellation claim after her father became ill

In October 2004, Miss J visited a travel agent and booked to go on holiday to Greece in June the following year. The travel agent also sold her an insurance policy to cover the holiday.

In January 2005, Miss J's father was diagnosed with a heart problem. He responded well to treatment and soon appeared to be back to normal. However, in May - just a few weeks before the start of Miss J's holiday - his condition suddenly deteriorated. Miss J found she needed to look after him almost full-time.

She tried to arrange some respite care, so that she could get away for her holiday as planned. However, it proved impossible to find a suitable carer at such short notice. Miss J cancelled the holiday and submitted a claim under her travel insurance policy for the full cost of cancellation.

The insurer rejected her claim. It referred to the following provisions:

"Cancellation:

Cover applies if You have booked a Trip to take place within the Period of Insurance, but You are forced to cancel Your travel plans because of one of the following changes in circumstances, which is beyond Your control, and of which You were unaware at the time you booked the Trip ...

  • Unforeseen illness, injury or death of a Close Relative as confirmed to Our medical staff by the treating doctor, who will deem whether it is necessary for You to cancel or curtail Your Trip ...

To declare a Pre-existing Medical condition or a change in Your state of health or prescribed medication, You should contact the Medical Screening Helpline ...".

The insurer said that Miss J had been aware of her father's illness in January and could have cancelled the holiday at that stage for only 15% of the cost. It also said she should have contacted its helpline in January (to declare the change in her father's state of health), and again in May (when his condition worsened and she had attempted to obtain respite care for him).

complaint upheld
The medical evidence we obtained confirmed that:

  • Mr J's condition had responded very well to treatment in January and
  • there had been no reason at that time for Miss J to believe her father's state of health would force her to cancel her holiday.

It was the unexpected change in Mr J's health in May, and Miss J's inability to find respite care, that meant she had to cancel the holiday. We found that Miss J had acted reasonably and promptly in seeking respite care, and in notifying the insurer and cancelling the holiday when this proved impossible.

We did not believe the policy imposed a duty on the policyholder to call the insurer's medical screening helpline if there was a change in the health of anyone on whom the holiday might depend. Any such duty would constitute an "onerous" term, and would have to be made very clear to the customer before the policy was sold. The insurer had made no effort to do this through its own policy summary or sales documentation, or through the efforts of the travel agent.

We upheld the complaint and required the insurer to reimburse Miss J for the full cost of cancelling her holiday.

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ombudsman news issue 56 [PDF format]

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.