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Case Study - Deviation from a prescribed contract - travel insurance


An insurer provided Sharon’s bank with travel insurance for her and other customers who held a bank credit card.

While Sharon was overseas, her travel bag, laptop and a number of other items were stolen from a train’s baggage storage area. The insurer rejected Sharon’s insurance claim, relying on a policy exclusion for items left unattended in a public area. Sharon brought her dispute to FOS.

FOS noted that travel insurance is a ‘prescribed contract’ for which the Insurance Contracts Regulations 1985 set out prescribed terms. The prescribed terms for travel insurance contracts do not exclude unattended baggage.

Neither the bank nor the insurer could show they had made a copy of the insurance policy available to Sharon. FOS said it would have been fair in these circumstances for the credit card holders to have been informed of this exclusion.

FOS also said the insurer could have informed the credit card holders directly through appropriate documentation. Alternatively, the insurer could have directed credit card holders to a publication of the relevant exclusion on its or the bank’s website.

FOS considered that it was not fair in these circumstances for the insurer to rely on its policy exclusion.

Read the full article: ‘Notifying third party beneficiaries of derogations from prescribed terms of insurance contracts’.