Annual and long-term travel insurance policies have become more popular in recent years - in part because they are increasingly being offered as a "free" or low-cost benefit in connection with a bank account, credit card or other financial services product.
As the following case studies illustrate, complaints involving longer-term travel policies can sometimes raise different issues from those we generally see in connection with policies covering a single trip.
Mr K had an ongoing travel policy that his bank had provided, free of charge, as one of the benefits of his current account. Under the terms of the insurance, the cover remained in operation as long as he retained the account.
In October 2006, Mr K and his wife booked to go on a cruise, departing early in the New Year. A few weeks after making the booking, Mr K suffered a temporary loss of vision and was referred to a specialist. Mr K's vision had returned to normal by the time of his consultation with the specialist, but she suspected that he might have had a minor stroke.
She therefore made a small adjustment to the medication he had been taking since he had suffered a blocked artery and heart attack four years earlier.
Mr K had no further problems with his vision and appeared to be in good health when he and his wife set off on the cruise towards the end of January. However, several days before the end of their holiday, Mr K had a heart attack.
Once he had returned home and his condition had stabilised, his wife submitted a claim under their travel policy for the expenses they had incurred while away - as a result of his illness. To the couple's dismay, the insurer said it was unable to accept the claim. It pointed out that the policy contained a condition requiring policyholders to report any changes in their health. Mr K had not reported the loss of vision he had experienced after booking the cruise.
The couple disputed the insurer's decision. They considered that they had complied with the policy condition requiring them to declare health changes. This was because they had sent the insurer full details shortly after Mr K had suffered his first heart attack in 2001. They said that since Mr K had very quickly recovered from the temporary loss of vision, they had not thought it sufficiently significant to be worth mentioning.
We looked closely at the policy condition cited by the insurer when it rejected the claim. We also examined the overall effect of the way in which the insurer applied this condition. The insurer told us it required policyholders to report all changes of health. Depending on the individual case, it would then consider whether or not to withdraw cover for any claims arising from that new medical condition.
The insurer said that because many apparently minor ailments or problems could be symptoms of a serious condition, it was impractical to provide policyholders with guidance about how significant a change in health needed to be before it should be reported.
In our view, this approach meant that the policy condition was a very onerous one. Requiring policyholders to contact their insurer every time they suffered any kind of ill-health placed a heavy responsibility on them. It also meant that policyholders could never be certain exactly what cover was available under the policy. If, each time a policyholder experienced any change in their health, the insurer could simply withdraw cover, it was difficult to see how a claim for ill-health could ever be made, unless the illness arose entirely without warning or as a result of an accident.
We noted that the insurer had agreed at the outset to offer cover against the risk of ill-health affecting a policyholder's travel plans. So Mr K was relying on the policy for the peace of mind of knowing he was covered for any financial loss he might incur if he was taken ill after booking a holiday.
We do not consider it fair for an insurer to use a policy condition to achieve an effect that would not be apparent to a reasonable policyholder, and that would place onerous demands on them.
If claims resulting from a change in health are not covered, then the benefit of the cancellation cover is severely limited. So we did not consider in this case that the insurer was entitled to rely on its policy condition to reject Mr K's medical expenses claim. We upheld the complaint.
When she applied to buy an annual travel insurance policy, Mrs C told the insurer that she suffered from angina. It agreed to cover her for this condition.
Several months later, her GP made a small alteration to the medication she took for her angina, as she had begun to experience some minor side effects with the original dosage.
Mrs C had no further health problems until six months later, when she was admitted to hospital while on holiday in Florida. She was suffering from chest pains, linked to her angina.
Fortunately, Mrs C recovered fairly quickly and was soon able to return home. It had never crossed her mind that there would be any difficulty in claiming back from her insurer the medical expenses she had incurred while on holiday. However, the insurer refused to meet her claim. It said she had failed to comply with its policy condition requiring her to inform it of any changes in her health. After complaining unsuccessfully to the insurer, Mrs C contacted us.
We noted that the policy condition in question was not stated clearly in the policy document. And it had not been specifically pointed out to her when she bought the insurance. Moreover, the policy gave no explanation of what it meant by a "change in health". There was nothing to indicate that policyholders should tell the insurer about any change in medication.
We were satisfied that if the position had been clearly explained to Mrs C at the outset, she would have told the insurer that her medication had changed. If the insurer had then said it could no longer provide cover for this condition, she would have arranged alternative cover. In the circumstances, we did not think it was fair for the insurer to reject the claim. We upheld the complaint.
Three months after Mr G had taken out an annual travel insurance policy he booked a trip to the Bahamas, departing in January 2006. He and his partner, Miss K, planned to get married during the trip.
Unfortunately, only a few weeks after booking the holiday, Mr G was diagnosed with cancer and underwent urgent surgery, followed by radiotherapy. It was not until three days before he was due to travel that he was well enough for his doctor to declare him fit for travel. He called his insurer straight away to check that he would be covered if he experienced any problems linked to his cancer while he was away.
The insurer promised to get back to him urgently. However, it was not until the afternoon before he was due to set off that the insurer contacted Mr G. It told him it would not cover any claims resulting from his cancer. The insurer did offer to meet Mr G's cancellation claim if he decided to cancel the holiday at this point. Understandably, however, Mr G did not want to cancel his wedding. Instead he spent several hours ringing round other insurers until he was eventually able to arrange a new policy that gave him the cover he needed.
On his return from holiday, Mr G complained to the original insurer and asked for compensation for the distress and inconvenience it had caused him. He had found himself effectively uninsured, less than 24 hours before he was due to depart. When the insurer rejected his complaint, Mr G came to us.
When rejecting Mr G's claim, the insurer had cited a clause in the policy that gave it the right to alter the policy terms if the policyholder's health changed before a holiday started, but after it had been booked. As in case 64/06, we did not consider this to be fair. Policyholders could not ever be certain exactly what cover was available under their policy.
It had clearly been distressing for Mr G to be told so close to his departure that his policy would not provide the cover he needed. And he had been put to considerable inconvenience - and some additional expense - in arranging the new policy. So we said the insurer should reimburse the cost of the new policy and pay Mr G £200 in compensation.
Mr G had an ongoing travel policy, provided by his bank as part of a package of benefits attached to his current account. Every year, the insurer sent policyholders a letter reminding them to report any changes in their health that had arisen over the past year. The policy excluded any claims relating to such changes unless, before booking a holiday, the policyholder contacted the insurer and the insurer specifically agreed to cover the new medical condition.
Mr G failed to tell the insurer that he had been diagnosed with a heart murmur, shortly before he had booked a trip to Greece. He had also failed to check with his doctor that he was fit to travel and there seemed to be real uncertainty about that.
Unfortunately, while he was in Greece Mr G suffered a heart attack. When he subsequently claimed for the medical expenses incurred while he was on holiday, the insurer refused to pay up.
It said he should have provided details of the heart murmur before he went ahead and booked the holiday. If he had done this, the insurer would have excluded cover for any heart conditions. Mr G considered this unfair and referred his complaint to us.
complaint not upheld
We were satisfied that the insurer had stated clearly - in its policy summary - the need for policyholders to declare any changes in their health. It had also made it clear what it meant by "changes in health".
And it sent policyholders a clearly-worded reminder each year, pointing out the need to inform it of any changes in health that had arisen over the previous twelve months. We noted that the insurer did not send policyholders any details of the health information they had provided in earlier years. We thought that in some instances this could make it difficult for policyholders to distinguish between "new" medical conditions and those they had already told the insurer about.
In this particular case, however, we did not think Mr G should have had any difficulty in knowing that the heart murmur was a new condition and that he needed to disclose it. If he had disclosed that he had been diagnosed with a heart murmur, the insurer was entitled - under the policy conditions - to exclude cover for heart conditions that affected any travel plans he made after disclosing this health problem.
Mr G had gone ahead and booked his holiday without telling the insurer that he had been diagnosed with a new and serious heart condition. He had also failed to check whether he was "fit to travel". We felt that in the circumstances of this particular case, it was fair and reasonable for the insurer to reject the complaint.
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.