Travellers are again being warned that insurance may be justifiably declined if airlines cancel flights due to increased fuel prices.
The sharp escalation in fuel prices this year forced airlines to cut their schedules and prompted warnings from insurers and the government’s Safe Travel website about the risk of disrupted travel from fuel shortages. The Insurance & Financial Services Ombudsman Scheme (IFSO Scheme) has released some details of a recent case highlighting “common” misunderstandings about flight cancellations.
The case involved a family’s return flights home to New Zealand after a trip to the UK were cancelled by their airline due to ‘operational requirements’. As a result, the family had to purchase replacement flights with another airline at a significantly higher cost.
The original airline refunded the cost of the cancelled flights, but this didn’t cover the full cost of the new tickets.
Their insurer declined the claim. It said the policy excluded cover for transport provider cancellations, except in limited circumstances such as mechanical failure or strike. The family made a complaint to the scheme, which found no evidence that the cancellation fell within one of the covered events listed in the travel insurance policy. As a result, the IFSO Scheme found the unnamed insurer was entitled to decline the claim. The family was left out of pocket for the fare difference between the original and replacement flights.
. . . A Warning
Karen Stevens, IFSO ombudsman, says it’s common for travel insurance policies to exclude cancellations caused by airline operational decisions.
Cover is usually limited to clearly defined situations such as severe weather, industrial action, or mechanical failure.
Stevens says that travellers should be aware that flight cancellations by airlines due to fuel price increases would usually be classed as operational.
If a flight is cancelled, the airline will usually issue a refund or give credit for the cost of the original flights.
However, if the only alternative flights available cost more, clients may have to pay the difference. She says this could happen more frequently if airlines continue to reduce flight schedules and cancel routes in response to higher fuel costs.
