When does my cover start?

Denise was planning a holiday for her family in Hong Kong in February 2020. On 11 June 2019 she purchased airline tickets using her credit card, intending to rely on the complimentary travel insurance.

As the political situation in Hong Kong intensified, Denise was carefully watching the news reports and noticed, on 6 August 2019, the Ministry of Foreign Affairs and Trade (MFAT) issued a travel advisory warning for travellers to ‘exercise increased caution’.

Denise still wanted to travel to Hong Kong and was about to book accommodation. Mindful of the travel advisory warning, she called the insurer to find out if the accommodation costs would be covered if they were forced to cancel the trip should the travel advisory warning be upgraded.

During the conversation, the travel insurer advised Denise that she was not insured at all because the policy had not been activated and Denise had purchased the tickets more than six months before her trip. Denise was shocked. She had travelled often believing she was covered by the complimentary credit card travel insurance and had never needed to claim before. Discovering that she was not covered if she purchased tickets more than six months before travel rocked Denise’s faith in her insurance policy.

Denise said she had never been aware of this limitation and complaint to FSCL.

 

Dispute

The insurer referred to the travel insurance policy which stated that it would reimburse pre-paid travel cancelled due to an unforeseeable event. The insurer agreed that the unrest in Hong Kong was an unforeseeable event as at June 2019, but said that the insurance cover had not been triggered because the policy definition of ‘travel’ excluded Denise’s situation.

The policy defined ‘travel’ as starting either when Denise activated cover or six months before the travel date, which ever occurs last. The insurer advised that Denise could have activated cover as soon as she bought the tickets by going online and completing an activation form. Denise did not know that this was an option, so had not activated cover.

As Denise’s trip was planned for 22 February 2020, six months before this date was 22 August 2019. The insurer advised that the policy was activated on 22 August 2019. The MFAT travel advisory was issued on 6 August 2019. Therefore, from the insurer’s point of view, the civil unrest in Hong Kong was not an unforeseen event as at 22 August 2019.

 

Review

We looked at the policy wording and noticed that the definition of travel was wider than that referred to by the insurer. The definition of travel went on to say that with respect to deposits for travel paid in advance, cover commences from the time the deposits are paid.

We checked with the insurer who agreed with our reading of the policy. We went back to Denise and reassured her that if MFAT increased the travel advisory warning to ‘extreme risk’ and she cancelled her travel as a result, the insurer would assess her claim for compensation in the usual way.

We also advised Denise that if she now books accommodation, but is unable to use it as a result of an increased travel warning, this would not be covered by the policy because civil unrest in Hong Kong is no longer unforeseeable.

 

Resolution

Denise accepted this reassurance and discontinued her complaint.

 

Insights for consumers

Credit card travel insurance is different to standard travel insurance. When you buy standard travel insurance, cover commences from the day of purchase. If you are intending to rely on credit card travel insurance, we encourage you to activate the cover online as soon as you make travel arrangements.

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