The Australian Financial Complaints Authority (AFCA) has ruled Zurich must pay a claimant for losses incurred from changes he had made to his travel plans to avoid the civil unrest in Hong Kong last year.

Zurich denied the claim when it was lodged in January, saying the claimant could still transit through the city in August last year as originally planned before heading to Europe. Instead the claimant decided to reschedule his itinerary and fly via a different route.

The insurer says it accepts the unrest in Hong Kong was unforeseen when the multi-trip travel policy was issued, but argued it had grounds to deny the claim as the cover has an exclusion for losses arising from a decision to change plans.

Zurich submitted there was nothing to prevent the claimant from doing a stopover in Hong Kong, and suggested he faced “no serious risk” as the hotel where he was supposed to stay was not in the main riot zones.

But AFCA disagreed, calling the suggestion unreasonable and unfair. The dispute mediator says the hotel was in an area where disruptions were likely and the claimant would invariably have to travel between the airport and his hotel, which would reasonably present further risks to his safety.

“The civil unrest in Hong Kong was a globally known event,” AFCA said. “The complainant would not have known where and when violence might erupt or spread to, when he was contemplating a change to his original travel plan.

“Even on an objective analysis, I am satisfied a reasonable person aware of the unrest and violence would have considered it necessary to avoid Hong Kong for their own safety.”

AFCA says evidence provided by the claimant of media coverage on the escalating violence showed he was genuinely worried about his safety should he do a layover in the city.

“The complainant’s act of changing his original travel plan was necessary for the protection of his safety. The fact he changed his original travel plan (instead of cancelling it altogether) demonstrates this.”

AFCA says in this dispute the exclusion for claims caused by a change in travel plans will not apply. It says the decision was a post-contractual act made by the claimant out of concerns for his own safety.

The mediator ruled the claimant is entitled to compensation based on section 54(5)(a) of the Insurance Contracts Act. This section of the Act does not allow an insurer to decline a claim based on a policyholder’s post-contractual act or omission in cases where it is necessary to protect his or her safety.

AFCA ordered Zurich to assess and pay the claimant’s covered losses with interest dating back to January 24 when it declined the claim.

It also ruled the complainant was entitled to $500 in non-financial loss compensation as the insurer’s handling of his claim has caused an unusual degree of delay, inconvenience and interference with his peace of mind.

Click here for the determination.