Mis-sold travel insurance

Types of complaints we see

Customers complain to us that the business who sold them travel insurance didn’t explain all the features and exclusions of their policy to them. In some cases this means they may:

• not have bought the policy if they’d known about a particular feature
• have acted differently on their trip if they’d known about a particular exclusion

If a customer complains that because a policy was mis-sold to them they’ve now had to cancel or amend it, we’ll look at their complaint on the grounds of misrepresentation.

What we look at

Whether the customer was eligible for the insurance

We’d check the policy document to see if the customer met the basic requirements for taking out the policy. This usually covers things like the customer’s age or residency. If the customer wasn’t eligible for a policy, they’d never be able to claim under it. In these cases we'd be likely to uphold the complaint.

Whether the policy was right for the customer

If you’re a business giving advice to a customer about insurance policies, you need to make sure the policy is right for them. You need to ask them about their:

• age, residency and health
• travel plans, including where they’re going and how long for

If you’ve done this, you should be able to recommend the right policy to your customer.

When most travel insurance policies are sold, the customer doesn’t get advice from the business selling the policy. In this case, you don’t need to make sure the policy is right for the customer, but you do need to give your customer enough information about the policy. Information about the insurance should be:

• clear
• fair
• not misleading

The customer can then make an informed choice about whether or not to buy the insurance.

Exclusions and restrictions

You should draw your customers’ attention to important or unusual features of a policy, like exclusions and restrictions on what they’re covered for. An example of an unusual exclusion is a travel insurance policy that doesn’t offer any cancellation cover.

Policy terms are important because they:

• may affect a customer’s decision to buy the policy
• limit cover – for example, an exclusion about pre-existing medical conditions
• may have exclusions relating to the customer’s particular trip – for example, if a customer tells you they’re going on motorcycling holiday, you should warn the customer of any policy exclusions about riding motorbikes
• may ask the customer to do something specific in order to get the benefit of cover – for example, customers may need to keep valuables on their person or in a locked safety deposit box to make sure the valuables are covered against theft

The start date of an annual policy

A lot of customers who have an annual policy buy their insurance before they go on holiday, but choose to start their insurance on the first day of their next trip. This can be a problem as the policyholder isn’t covered for any cancellation of that holiday, because the policy cover hasn’t yet started.

We expect businesses selling travel insurance to make sure that their customers are aware of:

• the importance of the policy start date
• the risk of not being covered for cancellation if their policy starts too late

Complaints about claims and the mis-sale of a policy

Some customers complain about their insurance claim, but also say the policy has been mis-sold to them.

We’d usually look into the complaint about the claim first before considering any complaint about a mis-sale.

Find out about complaints about the mis-sale of a policy from a packaged bank account.

Handling a complaint like this

If your customer complains about a policy term that’s unusual, we’ll want to know that you highlighted this to them when they bought the policy.

It will help if you can provide call recordings or screenshots of the sales process to show you did this.

If your policy summary or key facts document clearly highlights unusual terms, this may be enough to prove that you drew the customer’s attention to the important restrictions.

Putting things right

If we decide that a travel insurance policy has been mis-sold to a customer, we’ll look at what they may have done differently if they’d had the relevant information.

The customer wouldn’t have done anything differently and would still have bought the policy.

In this case we’d say the insurer has done something wrong, but doesn’t need to do anything to put things right financially.

The customer would have bought the policy but paid extra for an optional cover.

In this case the customer would then have had the additional cover they needed but would’ve paid a higher premium. We’d say the insurer should pay the claim with interest, minus the additional premium.

The customer would have bought a different policy that would’ve covered their claim.

We’d need to know how likely it was that the customer would’ve found a different policy. We’d check alternative policies in terms of cost and cover and if we agree, we’d ask the insurer to pay the claim.