Many people get a lot less out of their insurance claims than they were expecting, thanks to the small print.
But what’s remarkable about the case of Christelle Colman is that she is herself an industry professional — she is CEO of Ami Underwriting Managers. If she gets an unpleasant surprise at claim time, what hope do the rest of us have?
Colman, from Cape Town, bought a bells-and-whistles travel policy from Hollard — R4,000 to cover four people — ahead of the family’s planned mid-year European holiday, in an attempt to leave her as little exposed to the risk of financial loss as possible.
And then it happened. About a month before their scheduled departure, her son broke his leg and the holiday had to be cancelled.
British Airways refunded most of the international fares and ItalRail refunded her in full (good to know), but she couldn’t engage with the budget airlines with which she’d booked their flights within Europe, much less cancel those flights.
So she claimed for the shortfall in the BA refund, and for the internal flights in full, which came to just under R30,000.
After the standard R2,000 excess payment (R500 per person) was deducted, Colman was paid just R4,760. When she queried the relatively tiny payout, Hollard told her in an email that her claim for airport taxes was unsuccessful.
“You are claiming for prepaid, nonrefundable airline tickets,” the insurer said. “The policy wording states: ‘Cannot travel, the policy provides cover for the unused prepaid airfare and accommodation less any refunds due to you. The policy does not cover airport taxes or service fees [charged] by your agent.’”
Colman didn’t book through an agent, so I put it to Hollard that a surprisingly large deduction appeared to have been made to cover airport taxes in Colman’s case.
It turns out that Hollard had failed to process “a significant portion” of her claim.
“Our claims assessor has confirmed that an amount of R11,262 claimed for [as the shortfall in the BA refund] had not been processed,” said Hollard spokesperson Warwick Bloom.
“We’ve apologised for the oversight.”
So that took her payout to about R16,000, still way below her losses of about R29,500.
And that’s when things got complicated.
Bloom pointed out that Hollard Travel does not exclude airport taxes from claims, only “refundable airport taxes”; refundable by airlines, that is.
“The clause merely prevents a claimant from receiving a double payment in respect of these taxes,” he said.
“The first claim a policyholder has in the event of a flight cancellation, is against the airline — this is spelt out clearly in the policy document.
“Any taxes that are refunded by the airline — ‘refundable airport taxes’ — must be deducted from the travel insurance claim,” he said, to avoid the client being enriched, rather than merely returned to the financial position they were in before the claim.
“Our policy clearly states that we pay ‘the unused prepaid airfare ... less any refunds due to you’.”
Ah, but “due to” you and actually being paid are not the same thing, as Colman’s case demonstrates.
As for agents’ fees, Bloom said when a flight is cancelled by the customer, the fee the agent was paid is not part of the claim because they did render the service.
This wasn’t a factor in Colman’s claim as she made the bookings directly with the airlines.
I pointed out that while the policy wording states that “refundable” airport taxes are excluded, Hollard told Colman in claims correspondence that “the policy does not cover airport taxes”.
He came back with: “Our claims response used the incorrect wording and it is indeed refundable airport taxes and fees to which we are referring at all times in terms of exclusion.”
My emails were ignored and the only option they gave me was to interact on the website or app, but there was no option to cancel because the app said the flights were nonrefundable
— Christelle Colman
Finally, through the obscuring mists of contract terminology, and some confusion about what portion of Colman’s internal air fares comprised airport taxes, the big issue emerged.
Colman had been unable to contact the airlines — EasyJet and Wizz Air — to cancel two flights for which she’d paid about R18,000 in total. But not through lack of trying.
“I spent many hours online, trying to do it,” she said. “My emails were ignored and the only option they gave me was to interact on the website or app, but there was no option to cancel because the app said the flights were nonrefundable.”
But — and here’s the warning to would-be travellers — if you don’t or can’t cancel your flight, the airport taxes will be excluded from your travel insurance claim, because theoretically, the airline concerned would refund you the airline portion of your ticket.
And technically Hollard could have rejected her claims for those tickets in total, given that Colman did not cancel the flights, Bloom said. “However, we are comfortable that paying out the amounts we did was in line with the principles of ‘treating customers fairly’, as she could not find a way to cancel, despite her very evident intention to do so.”
Colman is of the view that Hollard — and other travel insurers — should warn consumers that if they use an overseas/European aggregator to book their flights, it might not be possible for them to cancel.
No can do, Bloom said.
“It may be seen as prejudicial to some such providers. The rules and processes of a third party are unfortunately out of our control,” he said. “The biggest learning here is to check for refund processes with your chosen travel service provider. It’s a bit of a downer amid the excitement of booking international travel, but just one of those things you probably have to do.”
Indeed. Along with interrogating the Ts&Cs of your travel insurance policy.
Hope for the best; plan for the worst.
• Contact Knowler for advice with your consumer issues via email: consumer@knowler.co.za or on Twitter: @wendyknowler
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.