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ombudsman news

issue 1

January 2001

case studies - travel insurance

01/016 maladministration - travel - repatriation - failure to embalm body before repatriation - whether insurer responsible for failure.
01/017 travel - cancellation - duty of disclosure - change in medical condition - whether policyholder under continuing duty to disclose any change in medical condition.
01/018 travel - personal accident - total and irrecoverable loss of sight - policyholder retaining 3% vision - whether loss of sight claim valid.
01/019 travel - curtailment - requirement that policyholder return home - earthquake - policyholders relocating at holiday destination - whether holiday curtailed - whether assistance company authorised expenses.
01/020 travel - curtailment - cover limited to disaster at home - earthquake at resort - whether policyholders' claim covered.
01/021 travel - curtailment - death of relative - relative resident abroad - whether policyholder's return to UK covered.

01/016
maladministration - travel - repatriation - failure to embalm body before repatriation - whether insurer responsible for failure.

The complainant's son and daughter-in-law went on holiday to Madeira, where the son died following a heart attack. The widow contacted the assistance company appointed by the insurer to arrange repatriation of the body and local funeral directors were instructed.

When the mother went to view her son's body in the UK, she was not allowed to see it as it had not been embalmed before repatriation and had deteriorated badly. The mother was greatly distressed. She complained to the insurer, which undertook extensive enquiries and liaised with the local British Consulate. It was established that the funeral directors were not on the assistance company's approved list.

The funeral directors explained that they would not normally carry out embalming unless they received specific instructions to do so. The Consulate confirmed that embalming was not the usual practice in Madeira. The mother considered that the failure to ensure the body was embalmed resulted from the insurer's wish to cut costs.

The insurer stated that embalming expenses were reasonable and necessary and that it would have met the charges. It contended that only an error had prevented its general practice being followed in this case. Normally, the assistance company would have contacted local funeral directors. They did not do so in this case because the funeral directors were not on its approved list. It could not be established who had appointed them. And the insurer was not able to identify who had been responsible for the decision not to embalm to body.

complaint upheld in part
The failure to embalm the body resulted from a series of oversights and genuine errors on the part of a number of organisations. These oversights and errors did not seem part of any attempt by the insurer, or any of the other parties, to avoid their proper responsibilities. However, we concluded that the insurer, through its agents - the assistance company and funeral directors - had failed to provide the service it should have done. All of these had also failed to give the mother's initial concerns the attention they deserved.

The insurer confirmed it would implement steps to ensure that, in future, embalming would always be specifically requested. It would advise all its assistance companies that it would meet the cost of preparing a body for repatriation. The mother had made it clear that her complaint was not about financial compensation. Nevertheless, we required the organisations concerned to provide a full apology and to make donations to the British Heart Foundation.

01/017
travel - cancellation - duty of disclosure - change in medical condition - whether policyholder under continuing duty to disclose any change in medical condition.

In June 1999, the policyholder booked a cruise for himself and his fiancé from 5-20 March 2000 and took out insurance. He signed a declaration relating to himself, anyone travelling with him and anyone else whose health might affect the trip. This stated that no one was waiting for an operation, hospital consultation or other hospital treatment or investigations. The declaration stated that -

"If there is a change in your medical condition or the medical condition of anyone who the trip depends on (after you take out this insurance, but before you travel) and you can no longer agree with the declaration, you must contact [the insurance company]. We will then tell you if cover can continue. If we cannot continue cover, you can claim for the cost of cancelling your holiday at that time.

"If you do not tell us about anything we have asked for above, we may not pay your claim."

The fiancé's mother was diagnosed with cancer in December 1999. She underwent surgery in January 2000 but was told in February that further treatment would be required. The policyholder cancelled the cruise then and claimed reimbursement under his travel insurance.

The insurer settled the claim by paying £250 - the cost of cancelling in December 1999. The policyholder sought reimbursement of the full cancellation charge of £1,394.

complaint upheld
The declaration imposed two duties of disclosure on the policyholder, the second of which was an extended or continuing duty that applied to the period - just over eight months - immediately before departure. We regarded the continuing duty of disclosure as both unusual and unduly onerous. It was not inconceivable that, after a policyholder had notified a change in someone's medical position, the policyholder and insurer might hold conflicting views about whether cancellation was necessary at that stage.

The practical effect of the declaration was to make the insurer the sole arbiter of whether any policyholder should cancel the holiday. We considered this inherently unfair and a possible contravention of the Unfair Terms in Consumer Contracts Regulations 1999.

We were not persuaded that the policyholder should have cancelled in December 1999. There was no evidence that he and his fiancé had realised at that time that they should cancel the cruise immediately, even though it was not due to take place for 11 weeks. The insurer accepted our recommendation and paid the balance of the charges plus interest.

01/018
travel - personal accident - total and irrecoverable loss of sight - policyholder retaining 3% vision - whether loss of sight claim valid.

The policyholder went on holiday with her family to Florida on 1 January 1998. Three days after arriving, they were involved in a serious road accident. They contacted the assistance company and the policyholder and her daughter were hospitalised.

The policyholder submitted a claim for loss of sight under the personal accident section of the policy. She said she had no useful vision in her left eye and there was no prospect of improvement.

The insurer insisted on obtaining additional medical evidence. The insurer's consultant concluded that the policyholder had lost all central vision but retained a small amount of peripheral vision, which he estimated at 2-3%. In his opinion, "In theory, [the policyholder] had retained sight in the left eye. However, it was so minimal, it [would] be of no practical use to her. For practical purposes, [the policyholder] had lost all sight with the left eye". The policy stipulated that the £25,000 benefit was payable only for "total and irrecoverable loss of all sight in one or both eyes". The insurer contended that this provision should be interpreted literally and that therefore the claim was not valid. However, following our involvement, it offered an ex gratia payment of £12,500. The policyholder considered her claim should be met in full.

complaint upheld
We noted that the World Health Organisation defined "profound blindness" as the inability to distinguish fingers at a distance of 10 feet. The Royal National Institute for the Blind advised that only about 18% of blind people were classed as totally blind and the majority of those could distinguish between light and dark. We concluded that "sight" implied an ability to discern objects. On this basis we were satisfied that the policyholder had, for all practical purposes, suffered a total loss of sight. We required the insurer to meet the claim in full, together with interest, from the date of the accident.

01/019
travel - curtailment - requirement that policyholder return home - earthquake - policyholders relocating at holiday destination - whether holiday curtailed - whether assistance company authorised expenses.

The policyholder and his family were on holiday in Cyprus when, on 11 August, there was a series of earthquakes, one of which shook their holiday apartment so violently that the occupants were evacuated. They returned to the apartment for the next two nights but by 13 August cracks had appeared. The family was frightened, tremors were continuing and the policyholder decided to move them out of the apartment. He claimed the cost of re-arranging his family's holiday.

The insurer rejected the claim. It explained that curtailment of a holiday was only covered if the policyholders returned to the UK. The policy did not cover relocation at the holiday destination. The policyholder maintained this was unfair as the policy did not exclude earthquake.

complaint rejected
Earthquakes were not excluded by the policy but they did not need to be - they were not covered in the first place. The nearest section of the policy to the policyholder's circumstances was curtailment. This provided that the insurer would pay if the holiday was curtailed by a policyholder's returning home before the end of the holiday because of specified reasons such as death, illness, etc. But it did not include curtailment following a natural disaster in the holiday destination.

We were required to look beyond the strict legal position and to make a decision which was fair and reasonable in all the circumstances. Had the policyholder returned home, matters might have been different. In this case, whatever the policyholder's fears, they were not sufficient to cause him to return home before the scheduled date. We concluded that the insurer had acted reasonably.

01/020
travel - curtailment - cover limited to disaster at home - earthquake at resort - whether policyholders' claim covered.

In October 1999 the Turkish holiday of these policyholders (aged 74 and 76) was disrupted by a severe earthquake. Their tour operator offered to fly them home immediately but they decided to remain. They slept that night on the beach but changed their minds about continuing the holiday when the magnitude of the disaster became clearer. The hotelier was unwilling to allow guests to sleep in the hotel and suggested they slept instead on loungers by the pool. Further earth tremors could not be ruled out, so the tour operator flew the policyholders home at no cost.

The policyholders made a claim for curtailment. This was refused on the ground that the policy did not cover curtailment following an earthquake. The policyholders argued that this was unfair, as Acts of God were not excluded.

complaint upheld
If a particular risk was not covered by the policy in the first place, it was irrelevant whether or not it was excluded. So far as cutting short the holiday was concerned, the policy covered curtailment in the event of the death, injury or illness of the policyholders etc, or if the policyholders had to return home because of burglary, fire, etc affecting their home in the UK. There was no cover for curtailment following a natural disaster in the holiday destination.

However, we were required to make a decision which was fair and reasonable in all the circumstances. In our view, when they took out the travel insurance as part of the holiday package, the policyholders would have envisaged that it would cover them for exactly the type of problem they had encountered. The absence of cover for events giving rise to a real need to curtail the holiday restricted the cover and had not been highlighted in the policy material. According to the insurer's position, the policyholders would only have had a justifiable claim if they had become ill or been injured. It was arguable that this was a significant possibility, given the policyholders' ages and their having to sleep in the open. Taking all these points into consideration, we decided the fair and reasonable solution was for the insurer to meet the claim.

01/021
travel - curtailment - death of relative - relative resident abroad - whether policyholder's return to UK covered.

Following the death of his mother in Kenya, the policyholder and his wife had to return home to the UK from their holiday in Amsterdam. The insurer refused to meet the claim as the policyholder's mother was not resident in the UK. It referred to the policy section which covered curtailment due to "the death, severe injury or serious illness of an immediate relative resident in the United Kingdom".

complaint upheld
Although the policy wording was unambiguous, we considered that its application was unfair in the circumstances. The country in which the policyholder's mother was resident at the time of her death did not seem relevant, as he and his wife had first to return home to the United Kingdom. The insurer agreed to meet the claim.

Walter Merricks, chief ombudsman

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.