When purchasing airline tickets for an overseas family holiday, Rory also arranged travel insurance. A couple of months before the trip, the airline contacted Rory because the flight home had been cancelled. The airline offered tickets on a flight returning home a couple of days later.
Rory called his insurer to check that expenses for the additional two days would be covered. Rory explained that all the reasonably priced accommodation was booked, and they would have to stay at an expensive hotel. Rory was concerned the insurance might not cover the more expensive accommodation costs. The insurer told Rory to keep screen shots of the searches for cheaper accommodation and submit the claim on his return.
Rory kept records of the additional accommodation and food costs and submitted the claim. The insurer accepted the additional accommodation costs, but declined to cover the additional food costs.
Rory did not accept the insurer’s decision, and complained to FSCL.
The insurer explained that the food costs were not an additional expense because Rory and his family were always going to have to eat, whether it was overseas or in New Zealand.
Rory said that the food costs were an additional expense because he and his family would not have eaten out had they been in New Zealand. The cost of eating out overseas is much more than the usual cost of home cooking.
We asked the insurer to review its decision. In our view the insurer was obliged to reimburse Rory for food costs because they were reasonably and necessarily incurred as a result of an unforeseen event, and covered by the policy.
The insurer agreed, accepting Rory’s claim for $545.
Meanwhile, the insurer’s claims team assessed the claim and deposited $544.90 into Rory’s bank account, being the actual amount of Rory’s loss.
Rory contacted us, annoyed that, after agreeing to pay him $545, the insurer had paid $544.90. Rory claimed compensation of $1,000.10, the additional $1,000 was for the hurt, humiliation, expenses and discrimination Rory said he had experienced during the claims process.
We acknowledged Rory’s frustration that his claim was settled for 10 cents less than he expected, but because $544.90 was the correct amount of his claim we considered the settlement paid by the insurer was reasonable. We could not see any evidence of additional costs or discrimination and considered the disappointment at receiving 10 cents less than expected did not warrant compensation. We all experience disappointment from time to time in our daily lives.
We advised Rory that we were declining to investigate his complaint because we were of the view the insurer had made a reasonable settlement offer. We noted that Rory had not suffered either a direct financial loss nor sufficient inconvenience to warrant compensation.
Insights for consumers
From time to time, in everyday life, we all experience irritation and annoyance. In an ideal world, all insurance claims would be settled immediately and there would be no difference of opinion between insurers and insured. Sometimes you will have to make a complaint to an external dispute resolution body to achieve the outcome you are looking for. But it does not necessarily follow that lodging a complaint warrants compensation for inconvenience.