Why travel insurers may refuse your case and how to make a complaint

Many of us are rushing to the exits – Aer Lingus has just reported one of the busiest weeks over February mid-term since the pandemic started. However, while we may be keen to embrace a bit of sunshine and variety after the past two years, the Covid-19 pandemic has not entirely disappeared from our radar.

While we might be hastily booking flights, many of us are also looking to bump up our travel insurance cover to ensure that, if we do get stuck somewhere for Covid-related reasons – or otherwise – we won't be entirely out of pocket.

Ensuring you have the appropriate cover is not always straightforward, however. As a new report from the Financial Services and Pensions Ombudsman shows, the devil is in the detail when it comes to travel insurance.

Report

For the report, the ombudsman’s office examined some recent complaints from consumers and found many travellers believed they had cover under their insurance policy for certain events or circumstances, only to make a claim that was refused.

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“If you are making holiday plans for this year and thinking about taking out a travel insurance policy, I would urge you to take some time to ensure that any policy provides the cover you expect,” says ombudsman MaryRose McGovern.

While such policies won’t “cover you for every eventuality”, it is still worth taking some time now, while making holiday plans, to consider your insurance needs, McGovern advises.

Below we take a look at some of the complaints and the lessons to be learned.

Covid-19

Let’s say you go on holidays, but the Government (heaven forbid) issues a warning on foreign travel once more, due to the resurgence of Covid-19. You might think your policy offers cover in such instances, but not always.

Would you, for example, consider that arriving home early from such a holiday abroad would be defined as you cancelling your trip or cutting it short? It’s an important distinction because travel insurers can treat both those descriptions differently.

Sebastian had to return early to Ireland in March 2020 due to the onset of Covid-19 and the related restrictions. He made a claim of €1,000 to his travel insurance provider to cover related accommodation and flight expenses, but was refused. The insurer argued that under the "cutting your trip short" section of Sebastian's policy, he was insured against specified events – but the circumstances leading to his claim did not come within those specified events.

Investigating the claim, the ombudsman said that if his claim had been considered under the “cancellation” part of his policy, he would have been covered, given the warning from the Department of Foreign Affairs to avoid non-essential travel at that time. However, given the terms of the policy, the ombudsman found that the insurer was in fact correct to deem Sebastian’s actions to be related to cutting short his trip, and thus ruled that he wasn’t entitled to any compensation.

Lesson: Don't just look at cancellation benefits on offer when buying a policy, but also at "cutting your trip short" and what protection this offers you.

Medical matters

Medical issues are one of the most common reasons why people take out holiday cover but make sure you are adequately covered to avoid any disappointment.

Emma and Ross booked a holiday in Italy and were due to travel in September 2016. They had taken out a travel insurance policy the previous January, which the couple expected would cover them.

In September, Emma visited her doctor complaining of pain and decided to cancel their trip, subsequently submitting a claim to their travel insurance provider. However, their claim was turned down as their policy specifically excluded claims arising directly or indirectly from anxiety

Emma argued that her anxiety was caused by her pain, caused by arthritis, which was her main medical issue. But Emma’s doctor had specified “anxiety” as the main condition on the medical claim form completed.

As her policy excluded claims arising directly or indirectly from “stress, anxiety, depression or any other medical or nervous disorder”, the ombudsman agreed that the travel insurer acted appropriately in refusing the claim.

Another point to remember when it comes to medical issues is that cancellations arising from medical conditions that existed before the policy was taken out may not be covered. As McGovern notes: “If you have a medical condition, undiagnosed medical complaint or are undergoing medical investigations at the time you take out a travel insurance policy, you must inform your insurer so that it can determine whether it has any effect on your policy cover.”

Lesson: If you suffer from a specific illness, in particular those related to mental health, you should check that your policy covers these before you purchase. Otherwise you stand to lose out should you need to curtail your trip.

Theft

Another of the major reasons many people take out a travel insurance policy is to cover the costs and inconvenience of being robbed while on holidays. However, be aware that many exclusions exist.

One couple, Mark and Sandra, found this out when their car was broken into in Spain, with items stolen from the boot which had been locked at the time.

However, when they made a claim with their travel insurer, it was rejected on the basis that their travel insurance policy did not provide cover for the loss, theft of, or damage to valuables left “unattended” at any time, including those left in a motor vehicle.

Unhappy with this, the couple complained to the ombudsman, arguing that their policy also contained a clause that baggage contained in an unattended vehicle would not be covered, unless in a locked boot.

The ombudsman took the view that the wording of these opposing and conflicting exclusion clauses created a “confusing situation”, making it nearly impossible for a policyholder to understand whether or not they would be covered.

In the end, the ombudsman directed the insurer to offer compensation of €500 to the couple.

Another issue arose when a traveller’s backpack was stolen from an overhead locker in the cabin, during a flight. Tara’s claim was rejected, however, on the grounds that her personal possessions were not kept “on her person”. She found this approach to be “unfair and unreasonable” given that the policy didn’t define exactly what “on your person” was. The ombudsman also argued that if the insurer had included a clear definition of “on your person” in its terms and conditions, it may have been clear to Tara that if she stowed her backpack in the overhead compartment, she wouldn’t be covered in the event of theft. But it didn’t do so.

As a result, it said that it was unreasonable for the insurer to reject the claim and, as a result, €600 compensation was offered.

Lesson: Don't be afraid to challenge a claim that has been refused; but bear in mind if the policy defines "on your person", unattended goods may not be covered for theft.

Cancellations

If a flight is cancelled, one might automatically assume entitlement to compensation from the insurer. Not always however.

Séamus, for example, was in France on holiday when his flight was cancelled due to an air traffic control strike. Subsequently, he booked an alternative flight home but found that his insurer wouldn't meet the cost of this flight.

The insurer said that it was entitled to refuse the claim, because the tourist had “prior knowledge” of the possible disruption of his travel plans, due to air traffic control disputes in France.

Again, a turn of phrase can have significant impact on the outcome for a tourist, as what, exactly, does “prior knowledge” refer to? Well, the ombudsman argued that even if Séamus had been aware of reports of disruptions, and so had “prior knowledge” of the strikes, how could he have known how his own flight would be impacted?

As a result, the claimant got compensation of €600.

Lesson: A "prior knowledge" clause is not enough for an insurer to dismiss a claim in certain circumstances. In addition, in order to ensure that you have cover for cancellation in certain circumstances, where possible, you should try and take out your policy as soon as you book your holiday.

“Buying insurance just before you go may give you cover for events and circumstances while abroad, but may not provide you with any protection if you need to cancel your holiday plans,” advises McGovern.

How to make a complaint

If you do feel you have been treated unfairly by a travel insurance provider, you can consider making a complaint to the Financial Services and Pensions Ombudsman. To do so, you must first make a formal complaint to the provider who sold you the policy. They are entitled to take up to 40 working days to hear your complaint.

Who you make your complaint to in the first instance will depend on how you bought your policy. A spokeswoman for the ombudsman says that if you bought from a broker, for example, and if your complaint is that the policy is unsuitable for your needs, the complaint will be with your broker. On the other hand, if the broker is a tied agent of the insurer, then the complaint of mis-selling will be one for the insurer to answer.

If your complaint relates to the insurer declining a claim made, however, or paying out policy benefits at a lower level than you expected, you should take this up with the insurance company which will be detailed on the policy documents.

If you’re not happy with the response you receive, then you can bring your complaint to the ombudsman, by completing a complaint form, and providing the final response letter you received from the travel insurance provider. Full details at fspo.ie.