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Travel Insurance and Emergency Expenses

danoleary55

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First of all this is not COVID related. I read through all the threads and couldn't really find someone with a similar experience so interested to know if any one has experience with type of situation. It relates to a flight I had cancelled, booked with rewards points, due to Typhoon Hagibis in Japan in October 2019 and the refund of an alternative flight that needed to be booked. You can basically read the last paragraph to get to my question.

I have put in date order so easier to follow the story;

12/10/19 Was due to travel from Shizouka to Tokyo via Shinkansen however all transport from heading to Tokyo was cancelled due to Typhoon Hagibis.
12/10/19 Received email from ANA that my flight from Haneda to Saigon Vietnam on 13/10/19 was cancelled. ANA were uncontactable and flights from Tokyo were grounded for a couple of days. My flight was a points booking in J with ANA and there were no flights able to be booked online, back to Vietnam, with cash for the next few days, 14-15th October 2019.
I had to return to Ho Chi Minh Vietnam by 15/10/19 for my departure at 12.30pm that same day, for my connecting flights back to Australia, SGN-SIN booked with points in J with SQ and.
SIN-MEL-SYD booked with points in F with QF.
13/10/19 Looking to reduce a potential claim, as per this wording in the PDS; "You not doing everything You can to reduce Your loss as much as possible", I found an alternative flight further south in Japan, from Nagoya direct to SGN on the 14/10/19, my flight that was cancelled was via Hanoi so this was not too bad however I did my best to reduce the claim and get back to SGN for my connecting flights. If I had of missed my J and F legs home the insurer would have been up for a much bigger claim.
From that point, all went to plan and i made the connections home.

I lodged a claim with the insurer for the new flight I had to book, it was in J the same class of travel as the cancelled flight and a few other incidentals and the claim was accepted however the claim amount accepted was reduced by a notional value of what the points were worth and the taxes I paid for the reward ticket. Ii disputed this and the insurer stood their ground and after disputing with AFCA the sent me a separate email to basically pay half the disputed amount without accepting liability.

Their reason for the reduction is based on this from the PDS;

"only those reasonable expenses over and above what You expected to pay for accommodation, meal and travelling expenses (including emergency personal telephone calls), had the Trip gone ahead as planned

Based on that they have said that the claim was only payable for those expenses over and above what I had expected to pay had the trip gone ahead as planned. This was done by deducting the original travel expenses from the additional travel expenses.

That's understandable as you would expect to get the monies back for your cancelled flight and then you would only be basically be paying your out of pockets above what the original flights cost which the insurer would refund.

Taking all of that into account and this is where the real question lies, I only paid taxes for the cancelled flight, with the taxes paid working out to be around 7% of the cost of the new flight. In other words the taxes were low on the cancelled flight however as per the wording above, all I expected to pay out of my pocket were the taxes for the flight. Instead the insurer has made up a value for the points and reduced the claim amount by the notional value of those points plus the taxes. Would love to get some opinions on this.
 

MEL_Traveller

Enthusiast
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Apr 27, 2005
Messages
21,138
It's a little bit hard to work out exactly what you mean from your post. Concrete number would help.

Most insurers that cover the loss of point will do at the value of the airfare for that sector. So for example if you had a $1000 fare, and spent 20,000 point, they would credit you with 5c per point.

How much are you actually out of pocket?

What does your insurer say about class of travel in the event of disruption? For a relatively short flight, was business class the only option?

How does flying back via Vietnam compare with purchasing a new ticket direct back to Australia, forgoing your business and first class flights via SGN and SIN? QF will allow you to cancel your flights up to 24 hours prior? So there would have been nothing for insurance to cover on that.

In general, we are under a duty to mitigate losses in the event of an insurance claim. Personally I would have tried to contact the insurer to see what options they wanted me to take. Fly home direct from Japan, or continue to fly to Vietnam, and if the latter, the appropriate class of service.
 

danoleary55

Active Member
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Oct 14, 2011
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649
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It's a little bit hard to work out exactly what you mean from your post. Concrete number would help.

Most insurers that cover the loss of point will do at the value of the airfare for that sector. So for example if you had a $1000 fare, and spent 20,000 point, they would credit you with 5c per point.

How much are you actually out of pocket?

What does your insurer say about class of travel in the event of disruption? For a relatively short flight, was business class the only option?

How does flying back via Vietnam compare with purchasing a new ticket direct back to Australia, forgoing your business and first class flights via SGN and SIN? QF will allow you to cancel your flights up to 24 hours prior? So there would have been nothing for insurance to cover on that.

In general, we are under a duty to mitigate losses in the event of an insurance claim. Personally I would have tried to contact the insurer to see what options they wanted me to take. Fly home direct from Japan, or continue to fly to Vietnam, and if the latter, the appropriate class of service.

Thanks for the response and to clarify a few things;

I did not claim for lost frequent flyer points for the cancelled flight as they will be refundable however I am still awaiting refund. They were Etihad points with flights booked on ANA. The insurer covers same cabin class so no issue booking business class for the new flight. I was only claiming for the new flight and train travel to the new departure destination. The cost of the new flight I had to book wasn't hugely expensive at $1,800. The flight was 6 hours so not that short. I had to travel back to Vietnam to pickup new suits with final fittings, so travelling directly home to Australia was not an option.

I searched every airport out of Japan and other connecting routes back to Vietnam to make my connections back to Australia, so there was no issue around myself not trying to mitigate loss. There was also no issue with the claim being approved by the insurer and I did call them from Japan around options.

The issue relates to the fact the insurer has reduced the amount of the approved claim by a dollar value they calculate the amount of points used for the reward booking would be worth. The points were from Etihad and they calculate they were worth $680 USD or around $970 AUD. They say they did this as they only cover expenses over and above what I had expected to pay had the trip gone ahead as planned. My argument is that my cost of this flight if the trip had gone ahead as planned was the taxes amount for the reward flight booking which was $114.

I therefore believe I am entitled to the $970 AUD the claim payment to me has been reduced by. After an AFCA complaint the insurer sent me a separate email offering $500 however to me it's more the principle now. A bit of research doesn't see much out there on this issue and I can't seem to track down an article I found earlier around this, with COVID travel insurance questions now dominating Google search. This issue may be a good reference point for the community.
 

MEL_Traveller

Enthusiast
Joined
Apr 27, 2005
Messages
21,138
ah! i see what you mean.

I’m afraid however i agree with your insurer! They have allocated a cost of the points you would have ordinarily used to take the flight.

You can’t have your points back AND a new replacement flight... only one or the other. If you had completely lost your FF points, say because they were non refundable at short notice, you would only have got the cost of the replacement flight from your insurer.... not the value of your points as well. (ie you don’t get a free flight out of this).

$680 for a six hour flight in business class seems reasonable. If you could show a comparable flight for a cheaper price, proving your points were worth less than $680, you could use that.
 
Last edited:

muppet

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Jun 19, 2010
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ah! i see what you mean.

I’m afraid however i agree with your insurer! They have allocated a cost of the points you would have ordinarily used to take the flight.

You can’t have your points back AND a new replacement flight... only one or the other. If you had completely lost your FF points, say because they were non refundable at short notice, you would only have got the cost of the replacement flight from your insurer.... not the value of your points as well. (ie you don’t get a free flight out of this).

$680 for a six hour flight in business class seems reasonable. If you could show a comparable flight for a cheaper price, proving your points were worth less than $680, you could use that.
I agree you can’t have your points and a free flight, but valuing points as the rate of a retail fare is really unreasonable.

Points should be valued realistically, i.e. almost worthless at the last minute.
 

MEL_Traveller

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Joined
Apr 27, 2005
Messages
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I agree you can’t have your points and a free flight, but valuing points as the rate of a retail fare is really unreasonable.

Points should be valued realistically, i.e. almost worthless at the last minute.
Valuing points at the retail price is how many travel insurance policies value the points. For example if you had to cancel a Qantas FF booking last minute, say first class London to Sydney, you could lose $10k-$12k for a one way fare. You get that in cash. So it works both ways.

Presumably the assumption is that you have your points back and they will save you the equivalent cash fare at a later date.
 

danoleary55

Active Member
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I provided the insurer with the value of the points, what it cost to buy directly form Etihad's website however the points cost me nothing and are not sellable for a monetary value. The cancelled flight cost 34,000 points.

As per the insurers PDS they cover "only those reasonable expenses over and above what You expected to pay for accommodation, meal and travelling expenses (including emergency personal telephone calls), had the Trip gone ahead as planned”.

Based on that, I only expected to pay the taxes for the cancelled flight. I'll provide some feedback once I progress this however some additional reference material confirms, unless you are claiming for lost points, which I am not, only monetary payment counts towards the cost of a flight for insurance purposes.
 

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