The Australian Financial Complaints Authority (AFCA) has made clear in two recent rulings that COVID-19 will not hold up as a valid reason to claim for travel cancellation losses if they don’t meet insurers' contract provisions.

Holidaymakers claimed for losses incurred in two disputes lodged separately against the same insurer, Allianz Worldwide Partners (AWP), after cancelling trips to Thailand and Bali in February because of the coronavirus.

The complainants argued they are entitled to compensation under the complimentary credit card travel insurance underwritten by AWP but AFCA disagreed, ruling the insurer is not liable since its policy wordings specifically say there is no cover for pandemic or epidemic-related cancellations.

AFCA points out Benefit 3, as explained in the AWP product disclosure statement (PDS), covers a cardholder for unexpected cancellation of travel arrangements and other unforeseen expenses arising from a range of 18 possible scenarios including natural disasters.

However epidemics or pandemics are excluded from the insurer’s definition of “natural disaster”, which it describes as any event of force or nature with catastrophic consequences such as avalanche, earthquake, flood, tsunami and volcanic eruption.

As a result the insurer is entitled to deny the complainants’ claims based on the information contained in the PDS.

“It is a well-established legal principle of insurance law that the onus rests with the complainant to establish the loss falls within the provisions of the contract,” AFCA said.

“However, the cause of the cancellation, being the coronavirus, does not meet the policy definition of natural disaster, and there is no cover for cancellation due to a pandemic or epidemic.

“The result is that the insurer is entitled to decline the claim and is not required to take any further action. As the complainant has not established a claimable loss, it is unnecessary to determine whether the insurer is entitled to apply any policy exclusions.”

In the complaint lodged by the holidaymaker who cancelled his trip to Thailand, he had submitted his claim fell under the “unexpected cancellation of travel arrangements” section of his policy.

He says he and his partner feared they would not be able to return because of quarantine measures and other restrictions. He also said the pandemic was an unforseen and unplanned event and that he worried about catching the virus during the flight.

The complainant was seeking to recover $1608 in cancellation costs.

In the dispute involving the Bali holidaymaker, the complainant wanted to claim for flight cancellation fees and deposits forfeited by the airline after they decided not to go ahead with their trip. He was seeking to claim $1549.30 from AWP.

The complainant argued he took precautionary measures by not proceeding with the trip and was also following the advice guidance on the Government’s Smartraveller website.

Click here for the Thailand case and here for the Bali case.