SERVICE: Travel
OUTCOME: Settled
Issues: Interpretation of contract terms
Mr and Mrs G held annual travel insurance for travel between 30 April 2022 and 30 April 2023.
In March 2023, Mr and Mrs G cancelled an overseas trip, after their daughter was diagnosed with cancer and required treatment during the time they were due to be on the trip. Mr and Mrs G made claims to the insurer for the non-refundable pre-paid costs of the trip.
The insurer stated that, because the trip started on 28 April 2023, Mr and Mrs G only had cover for 3 days of the trip and the remaining days fell outside the period of insurance, which ended on 30 April 2023. As a result, the insurer declined the majority of the claims.
Mr and Mrs G disputed the decision, as they did not believe that the insurer had correctly interpreted the policy.
The case manager’s assessment
The cancellation cover said that there was cover if “during the period of insurance, you or an insured person incurs loss of travel and accommodation expenses paid in advice of a proposed journey”. In addition, the policy listed the period of cover, as between 30 April 2022 and 30 April 2023.
When interpreting a contract, we will consider, among other things, the intention of the parties, commercial common sense, the natural and ordinary meaning of the words, the contract as a whole and the context in which the words appear. The more reasonable construction will be preferred and, in the last resort, if the contract is ambiguous, the policy is to be interpreted against the party which wrote the contract.[1]
Neither the policy nor the schedule specified that the period of insurance was also the travel period. Instead, a strict interpretation of both the cancellation cover and the period of insurance shows that the loss must have simply occurred within the period of insurance, as in this case.
Some policies in the industry deal with this issue by stating in the policy definitions that the journey must occur during the period of cover or have separate definitions of period of insurance and travel period. In this case, the policy had neither.
As a result, the insurer had not correctly interpretated the policy, within the natural and ordinary meaning, given the lack of additional or more specific policy definitions.
Following discussions with the case manager, the insurer agreed to accept the claims fell within the period of cover.
Complaint No: 00229601
[1] Bathurst Resources Ltd v L&M Coal Holdings Ltd [2021] 1 NZLR 696 and Firm Pi 1 Ltd v Zurich Australian Insurance Ltd [2015] 1 NZLR 432.