A traveller who says he had to spend more than $10,000 on ski trip clothing and other items after his baggage was delayed has lost a dispute over his insurer’s decision to provide limited cover for the expenses.  

The complainant lodged the claim after his baggage was redirected by the airline and arrived five days later during his US holiday in Aspen. The man says the delays required him to purchase essential clothing, including a ski coat worth nearly $9000, to continue with trip plans.   

Berkshire Hathaway Specialty Insurance accepted the claim but limited its payment to $3000, the maximum sum insured under the policy’s “delayed baggage” benefit.

The claimant says the insurer’s application of the policy limit was unfair, highlighting that the circumstances of the claim should be considered under the policy’s “baggage” benefit, which held a maximum insured sum of $15,000.  

The “baggage” policy wording says it covers instances where an insured “suffers damage to, loss of, or theft of their accompanying baggage”.  

The policyholder argues the claim should be treated as missing or lost baggage as he waited more than 120 hours for the items and says it was not fair for the insurer to apply the same policy limit as it would for a claim for an 8-hour delay.   

The insured says he was not “satisfactorily updated” on the whereabouts of his baggage and had assumed it was lost when he bought the replacement clothing. The US Department of Transport generally classifies items delayed by five days or more as lost, he highlights. 

However, the Australian Financial Complaints Authority (AFCA) says the policy clearly defines and differentiates its benefits for claims relating to delayed baggage and baggage that is lost, damaged, or stolen.  

“Relevant to the complainant’s claim, I accept the policy clearly informs that there is coverage for baggage which is delayed, temporarily misplaced or misdirected,” AFCA said.  

“Separately, there is coverage up to $15,000 for damage, loss, or theft of baggage.”  

“I am satisfied the policy wording and intent of cover is clear and unambiguous.”  

AFCA says there was no evidence to show that the items were missing or damaged from the returned baggage and that it was not fair to consider them under the “baggage” benefit.  

The ruling agreed that Berkshire Hathaway Specialty Insurance’s application of the delayed baggage benefit had been appropriate and fulfilled the policy obligations. 

“I acknowledge the complainant’s view that the claim should be considered under the provision for lost baggage,” AFCA said.  

“However, I am not of the same opinion, as the parties’ obligations and entitlements arise from and are dictated by the provisions of the contract of insurance.”  

AFCA was “not persuaded, on balance” that the complainant was able to show that his baggage was lost.  

“Further, there is no evidence that there were items missing or damaged from the returned baggage. Therefore, a valid claim for lost baggage has not been established under the policy,” the decision says.  

Click here for the ruling.