The Australian Financial Complaints Authority (AFCA) has ordered Chubb to pay a travel insurance claim triggered by the death of an 83-year-old, despite having a clause excluding deaths of relatives over the age of 80.

The complainant went on a golfing trip to Singapore in April last year, but cut the holiday short when his 83-year-old wife died.

He lodged an insurance claim with Chubb to cover the unused part of his trip and the cost of his early flight back to Australia.

The insurer denied the claim, saying the policy only covered deaths of relatives up to the age of 80.

However, AFCA says a “literal reading” of the policy establishes that coverage is in place.

The policy provides cover if “your journey is curtailed because of the unforeseeable death of your relative in Australia” or because of “any other unforeseen circumstances outside your control”. The definition of “relative” is restricted to people “not more than 80 years of age”.

AFCA says the death of the man’s wife does not fit the first category due to the exclusion.

“However, if a death is unforeseen and outside the complainant’s control, it fits the second category; it does not matter whether the person who died was a relative, or whether they were more than 80 years old.”

AFCA says the insurer must therefore settle the claim. It accepts that its interpretation of the wording “may not have been the insurer’s intent when it issued the policy”.

But it says the insurer was responsible for drafting the product disclosure statement, “so it is fair to hold the insurer strictly to its terms”.