In early 2019 Tina and Simon purchased tickets and insurance to cover a cruise around New Zealand and Australia, departing from Auckland on 10 March 2020.
On 10 March 2020 Tina and Simon received an email from their travel agent advising that their insurer had updated cover and would accept claims for Covid-19. The email included a link for more details. Tina clicked on the link, which gave more information, advising that the insurer was continuing to cover claims for medical and emergency medical transportation costs relating to covid-19. The advice continued:
The general exclusion for epidemic and government intervention took effect from 10am Friday 2020. However, [insurer] are not applying these general exclusions for claims related to Covid-19.
Reassured that they would be covered for Covid-19, Tina and Simon boarded the cruise.
On 14 March 2020 the New Zealand government announced that cruise ships were banned from entering New Zealand. The following day the cruise company suspended all cruises.
Tina and Simon had no option but to disembark and purchase tickets costing $985.10 to fly home.
Tina lodged a claim with the insurer for the additional travel costs of $985.10. The insurer declined the claim relying on a general exclusion clause for loss caused by an epidemic or pandemic. Tina disagreed and complained to FSCL.
Tina said the insurer’s decision was unfair, explaining that they had relied on the statement from her travel agent and insurer that they would be covered for loss relating to a pandemic.
The insurer maintained that the exception to the pandemic exclusion only applied to medical and emergency medical transportation and referred to a different statement, which said:
The general exclusion for epidemic and government intervention took effect from 10am Friday 28 February 2020. However, [insurer] are not applying these general exclusions for medical and emergency medical transportation claims related to Covid-19.
There was no dispute that the policy’s exclusion for loss caused by a pandemic applied and that the insurer was entitled to decline the claim.
It is accepted law that where there is ambiguity in an insurance policy, the interpretation favouring the insurer is preferred. We considered that this analysis can be extended to information about cover outside the policy. There was enough ambiguity in the screenshots provided by Tina to persuade us that it was reasonable for her conclude that, for whatever reason, the insurer had decided to cover loss caused by Covid-19.
Tina and Simon then relied on the insurer’s advice when deciding to continue with the trip.
We suggested that the insurer should accept Tina’s claim for $985.10, less the $200 excess. Both Tina and the insurer accepted our decision, and the complaint was resolved.
Insights for consumers
Sometimes representations, outside the policy wording, can impact on an insurer’s obligation to pay a claim.