In July 2019 Benedict booked a trip with a specialist travel company to a once-in-a-lifetime event. He intended leaving New Zealand on 5 December 2020 and returning on 15 December 2020. Benedict paid the tour company using his credit card, believing he had triggered the complimentary travel insurance cover. Benedict did not buy his airline tickets yet, thinking he had plenty of time to make those arrangements.
In March 2020 the New Zealand government, and the government of the country Benedict intended travelling to, closed their borders. Benedict was not too worried, hoping that by December 2020 the trip would go ahead.
In August 2020 Benedict went to his doctor for a standard check-up. During the check-up Benedict told his doctor about his planned trip. The doctor advised Benedict against travelling, saying that because Benedict was over 65 he was at an increased risk of complications with Covid-19.
Although Benedict still wanted to go, he took his doctor’s advice, contacted the tour provider, and cancelled his trip. The tour provider said Benedict was not eligible for any refund because they intended going ahead with the tour. Benedict submitted a claim to his travel insurer explaining he was cancelling the trip because:
- of the New Zealand government’s recommendation against travel
- the suspension of flights would make travel difficult
- of the medical advice from his doctor.
In September 2020 the country Benedict intended travelling to announced their borders were closed for another 90 days. However, in November the overseas government reversed the earlier decision and it would have been possible for Benedict to travel on 5 December 2020 if he had not already cancelled the trip.
When Benedict’s travel insurance claim was declined, he complained to FSCL.
Dispute
The travel insurer declined the claim because:
- Benedict’s cover had not been ‘’activated’’
- cover did not start until July 2020, 6 months before Benedict’s travel date
- Benedict’s trip was cancelled due to government interference, a policy exclusion
- Benedict was disinclined to travel, a policy exclusion.
Insurance activated?
The insurer said that, for the policy to be activated, Benedict needed to have purchased return flights. The insurer also said that the policy could only be activated six months before the date of travel.
Benedict said this response was nonsense. If he had purchased air tickets in August 2020 to activate cover, he would have been acting in bad faith because he would have known he would not be able to use the flights as, at that time, the overseas country had closed its borders.
When did cover start?
Although Benedict bought the tour tickets in July 2019, well before Covid-19 emerged, cover did not start until July 2020, six months before the intended travel date of December 2020. As Covid-19 was a known event in July 2020, the insurer said that no cover was available.
Benedict said this was not fair. He had purchased the tour well before Covid-19 became a known risk. It was not fair for the insurer to pick an artificial date one and a half years later as the commencement date of cover.
Was the trip cancelled due to government interference?
When Benedict cancelled his trip in August 2020 the government of the country Benedict intended travelling to had closed its borders. It would have been impossible for Benedict to travel, regardless of his health.
Benedict did not accept that the trip was cancelled due to government interference. Benedict was waiting and hoping the borders would open and, in fact, they had re-opened by December 2020 when Benedict was due to go on his trip. He only cancelled the trip after being advised against travel by his doctor.
Was Benedict disinclined to travel?
Even if Benedict had activated his policy, there would be no cover because he cancelled his trip due to the increased risk of Covid-19 complications posed by his age. The insurer considered an exclusion for disinclination to travel applied.
Benedict said the decisive factor in cancelling the trip was his doctor’s advice. Benedict’s doctor told him that he risked death if he travelled. Benedict said it would have been reckless for him to travel against medical advice.
Review
The circumstances of this complaint were extremely unusual. Benedict cancelled his trip after receiving medical advice not to travel. However, the borders were closed so travelling would have been impossible anyway at the date that Benedict cancelled his trip. But by the time Benedict was due to travel the borders had reopened, meaning that Benedict could still have travelled, but for his doctor’s advice not to.
Insurance activated
It was our view that even though Benedict had not purchased return tickets, insurance cover was activated when Benedict purchased the tour. Benedict’s policy only provided cover for 90 days. It was our view that the requirement to have a return ticket was to provide certainty around the period of cover.
We also noted that the policy required Benedict to have a return ticket before he left New Zealand. Benedict had not left New Zealand, so had not breached the eligibility requirement. Further the definition of ‘travel’ in the policy referred to travel commencing from the time the insured pays the deposit. Benedict had paid for the tour, so ‘travel’ had commenced.
Cover started when deposits paid
We did not accept that cover activated in July 2020, six months before the departure date. Again, the definition of ‘travel’ brought the claim within the policy wording. Benedict’s cover started when he paid for the tour, well before Covid-19 became a known risk.
Government interference with travel plans?
Benedict’s policy did not cover a claim caused by a government interfering with his travel. The overseas country’s border was closed in August but, by the time Benedict intended to travel, the border was open. But for Benedict’s doctor’s advice not to travel, Benedict would have been able to go.
Disinclination to travel
We did not accept that Benedict was disinclined to travel. Covid-19 posed a significant medical risk to Benedict and his doctor had advised against travel.
It was our view that although travel in August 2020 was impossible, this did not mean it would be impossible for Benedict to travel in December 2020. Up until Benedict’s doctor’s advice he appeared to be willing to wait and see how the pandemic developed. It was possible that Benedict may have waited until December before making a final decision about his trip. If this were the case, he would have been able to travel.
Resolution
Given the extremely unusual circumstances of this complaint, it was our view that it would be reasonable for the parties to share the loss. Both Benedict and the insurer agreed, and the complaint was resolved on this basis.
Insights for consumers and participants
Claims arising out of the cancellation of travel plans due to Covid-19 require a careful analysis of the policy wording against the circumstances of each case. Sometimes the circumstances are so unique that the fairest outcome is to split the loss between the insurer and the insured person, as occurred in this case.
