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ombudsman news

issue 76

March/April 2009

a selection of recent travel insurance complaints

issue 76 index of case studies

  • 76/8 - travel insurer refused to pay cancellation claim on grounds that consumer had not been eligible for cover under the policy
  • 76/9 - travel insurer turns down claim for cost of cancellation as policy did not come into force before the holiday began
  • 76/10 - travel insurer refuses to pay claim for cancellation of holiday on ill-health grounds
  • 76/11 - travel insurer accepted premium intended to provide cover for pre-existing conditions but failed to ensure the policy was properly in force
  • 76/12 - consumer obtains a "free" travel policy when she applies for a credit card - and later complains that extent of the insurance cover was not clearly explained

travel insurer refused to pay cancellation claim on grounds that consumer had not been eligible for cover under the policy

To celebrate her retirement, Mrs G booked a holiday cruise to the Baltic States and asked her friend, Mrs M, to accompany her. The two women had worked together for many years until Mrs M had moved away from the UK some eighteen months earlier to live with her family in Spain.

Sadly, two weeks before the start of the cruise, Mrs G received a phone call from Mrs M's son, telling her his mother had suffered a fatal heart attack. Mrs G then cancelled the holiday.

When she booked the cruise at the travel agent she had also arranged travel insurance for herself and Mrs M. So in due course she put in a claim to cover the costs she incurred in cancelling the trip. She also passed on the policy details to Mrs M's son, Mr M, so he could claim on behalf of his late mother.

However, the insurer refused to meet Mr M's claim. It said Mrs M had not been eligible for cover as she had been living outside the UK for more than 12 months at the time the policy was taken out.

The insurer said it did not provide cover for people who lived outside the UK, as they might use the travel policy as a cheap means of obtaining medical insurance, rather than as cover for any emergencies that might arise in relation to a holiday.

When the insurer rejected Mr M's complaint about its refusal to meet the claim, he referred it to us.

complaint upheld
At the time the policy was sold, travel agents did not fall within the scope of statutory financial services regulation. However, it was generally accepted as good industry practice that when travel agents acted on behalf of an insurer, the insurer was responsible for the way in which travel agents marketed and sold insurance policies.

In this instance, when the travel agent completed the application form for Mrs G, he entered her name as "the lead passenger" - and gave her address. The only information entered on the form about Mrs M was her name. We found no evidence that either the travel agent or the insurer had asked for her address or checked whether she was eligible for cover under the policy.

We were satisfied that Mrs M had genuinely been seeking insurance to cover a holiday. There was nothing to suggest she had been intending to use the policy to obtain medical cover more cheaply than she would have been able to get it (as a Spanish resident) if she had applied for a medical insurance policy. We upheld the complaint and said that - in the circumstances - the fair and reasonable outcome was for the insurer to pay the claim.

travel insurer turns down claim for cost of cancellation as policy did not come into force before the holiday began

In mid-October Miss W booked a holiday to Tenerife, due to depart a month later on 17 November. She was planning several other foreign trips over the following 12 months, so she told the travel agent she would not take the single-trip insurance policy it offered.

Instead, she contacted an insurer direct and bought an annual travel policy. This was set up to come into effect from 17 November - the date of her departure to Tenerife. Like most travel policies, the benefits it provided included cover against cancellation.

On 1 November, Miss W visited her doctor as she was feeling very unwell. The doctor diagnosed a "cardiac arrhythmia". When Miss W mentioned her forthcoming holiday, the doctor told her that, in the circumstances, it might not be wise to travel abroad. Miss W therefore cancelled the holiday and put in a claim under her travel policy.

The insurer told her it could not meet the claim, as her policy had not yet come into force. Miss W was very upset to learn this and she complained that it was on the advice of the insurer itself that she had agreed the start date for the policy.

She said that the insurer knew the date of her forthcoming holiday, so it should have explained that there was a risk in having a policy that did not come into force until the day that holiday began. If it had done so, she would have insisted on an earlier start date.

The insurer would not discuss the matter further with her but simply repeated that it would not pay the claim. Miss W then referred the matter to us.

complaint upheld
In order to decide this case we had to establish whether the insurer had made Miss W sufficiently aware that, by buying a policy that did not start until the actual day of her holiday, she would not be covered if she had to cancel her trip.

We obtained a tape recording of Miss W's initial phone conversation with the insurer, when the policy had been arranged. It was clear from this that she had told the insurer she was going to Tenerife on 17 November - and that the representative had suggested that would be a suitable start date for the policy.

While it could not be said that the representative had actually "advised" Miss W to have a policy that started on that date, he had not made any attempt to explain the implications of not having insurance in place before then.

When we raised this with the insurer, it said the policy documents made it clear that the policyholder would not be covered if the holiday was cancelled before the policy came into force.

However, in our view the insurer had not done enough to highlight to Miss W the risk that she was taking. We thought it unlikely that she would have agreed to the start date suggested by the insurer if she had understood this risk.

We told the insurer to treat the claim as if the policy had been in force on the date when Miss W cancelled her holiday. We said it should add interest to any payment due under the policy.

travel insurer refuses to pay claim for cancellation of holiday on ill-health grounds

On 10 September, three weeks before he was due to go on holiday to Greece, Mr C phoned an insurer to arrange some travel insurance.

During that call, the insurer read out a list of medical conditions and asked Mr C if he had ever suffered from any of them. It also asked if he was aware of "any condition that could reasonably be expected to affect your health during the period of the policy?" Mr C answered "no" to both questions and the insurer issued him with a travel policy.

Unfortunately, a week before his holiday was due to begin, Mr C had to cancel it. He did this on the advice of his GP - as he had developed a severe chest infection.

However, the insurer rejected Mr C's claim. It said he must have been aware he had the illness that led to the cancellation at the time he applied for the policy - but he had failed to disclose it.

Mr C thought the insurer was being unreasonable. At the time he bought the policy, he had a mild cough. This was not one of the medical conditions in the list that the insurer had read out to him over the phone. And he did not agree that he should have known - at the time of his call - that it might develop into a more serious condition that would affect his holiday.

When the insurer refused to reconsider its position, Mr C came to us.

complaint upheld
We established that Mr C's cough began a day or two before he phoned the insurer to arrange his travel policy. However, it had not at that time seemed to him to be anything worth worrying about.

It was only around a week later - on 17 September - that Mr C decided to see his GP, as his cough was not getting any better. The GP prescribed medication and said he expected Mr C's condition would start to improve within a few days.

However, on 26 September Mr C went back to his doctor and reported that he was still feeling far from well. The doctor prescribed stronger antibiotics and arranged for Mr C to have a chest x-ray. He also suggested that it might not be a good idea for Mr C to travel. Mr C cancelled his trip later that day.

In our view, there was no reason why - at the time he applied for the policy - Mr C should have told the insurer about his cough. He would only have needed to mention it if he knew there was a realistic possibility that the cough would develop into something serious enough to threaten his holiday plans. The evidence did not suggest that this was the case.

We also questioned whether it would have made any difference to the cover the insurer provided if Mr C had mentioned his cough when he applied for the policy. We thought this unlikely, as there had been nothing at that stage to indicate that Mr C was suffering from anything more than a minor seasonal ailment.

We therefore upheld the complaint and told the insurer to deal with Mr C's claim - adding interest to any payment it made.

travel insurer accepted premium intended to provide cover for pre-existing conditions but failed to ensure the policy was properly in force

Mr and Mrs K were given a "free" annual travel insurance policy as one of the benefits of their bank account. However, when they checked through the policy's terms and conditions before booking a holiday, they found that they were not covered for their "pre-existing" medical conditions.

Anxious to ensure that they had adequate insurance in place before their trip, Mrs K contacted a different insurer. She was quoted just over £200 to cover their pre-existing conditions and she paid this amount over the phone, using her debit card.

Unfortunately, while the couple were on holiday, Mrs K was taken seriously ill and had to spend several days in hospital. When she returned home she put in a claim to the insurer, backed up by a medical certificate that showed her illness had been connected to one of the pre-existing conditions for which she had sought cover.

However, the insurer turned down the claim. It said the cover for pre-existing conditions did not operate as an independent policy but was only available as an "add-on" for customers who also bought the insurer's "base" travel insurance. As the couple had not bought the "base" cover, they did not have a valid policy under which they could make a claim.

Mrs K complained that the insurer had failed to make it clear that she needed to buy the "base" cover. She pointed out that she would hardly have spent "so much money" to cover the pre-existing conditions if she had realised this cover was "worthless" on its own. The insurer then offered to refund the premium she had paid. However, it still refused to meet the claim, so Mrs K came to us.

complaint upheld
We asked the insurer to let us have its tape recording of the phone conversation during which Mrs K arranged the cover for pre-existing medical conditions. We noted from this that the insurer's representative had mentioned the "base" cover. However, he had not made it clear that the cover for pre-existing conditions only operated in conjunction with that "base" cover.

The insurer maintained that it had explained this point over the phone. It also said that it had sent Mr and Mrs K a letter which "clearly explained" that they needed to buy the "base" cover. We asked for a copy of the letter in question, but did not agree that it was clear. Overall, we were not at all surprised that Mr and Mrs K had thought they had adequate cover in place.

We told the insurer that we did not consider it had done enough to make Mr and Mrs K aware that the cover for pre-existing conditions only came into force if they also bought the "base" policy. We said that, in any event, the insurer should not have put itself in a position where it might be accepting premiums without providing any valid cover.

We said the insurer should accept and pay Mr and Mrs K's claim - subject to the policy terms and conditions and taking account of the premium the couple would have paid for the "base" policy, if they had realised they had to do this.

consumer obtains a "free" travel policy when she applies for a credit card - and later complains that extent of the insurance cover was not clearly explained

When Mrs J applied successfully to her bank for a credit card, she was also given a "free" annual travel insurance policy. The policy provided cover for Mrs J and - as a concession - it also covered "a spouse or partner" when that person was travelling with her.

Eighteen months later, while travelling in South Africa on his own, Mrs J's husband suffered a heart attack and incurred substantial medical expenses. He subsequently made a claim on his wife's annual travel policy. This was turned down on the grounds that he was only covered when he and his wife were travelling together.

Mrs J then complained to her bank. She said that when she had obtained the credit card, she had been led to believe that her husband would benefit from the "free" travel insurance, even when he was travelling on his own.

The bank rejected this complaint. It insisted that it had not misinformed her in any way her about the nature of the travel policy and the cover it provided. Mrs J then referred her complaint to us.

complaint not upheld
When we discussed the complaint with her, Mrs J admitted that neither she nor her husband had been entirely sure if he was covered by the policy when travelling by himself. However, she insisted that the bank should have explained the position more clearly when it offered her the policy.

In our view, the policy documents and all the accompanying literature made it perfectly clear that the card-holder's spouse or partner was covered only when travelling with the card-holder.

It was not at all unusual for a policy of this type to extend limited cover to a spouse or partner, so this was not a feature that needed to be specially highlighted. We concluded that the bank had not misled Mrs J about the extent of the cover and we did not uphold the complaint.

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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.