The travel cover refund lottery: Will you win your premium back?

Despite orders from the regulator to play fair, travel insurers are refusing full refunds for useless policies despite orders from the regulator to play fair.

A Money Mail investigation today reveals that customers are being fobbed off by insurers after their holiday plans were cancelled during the pandemic.

Ombudsman figures show complaints about travel insurers have also more than doubled in the three months to September, rising to 2,561, and around a quarter concerned refunds for cancelled policies.

Figures show complaints about travel insurers have  more than doubled in the three months to September, rising to 2,561, and around a quarter concerned refunds for cancelled policies

Figures show complaints about travel insurers have  more than doubled in the three months to September, rising to 2,561, and around a quarter concerned refunds for cancelled policies

Figures show complaints about travel insurers have  more than doubled in the three months to September, rising to 2,561, and around a quarter concerned refunds for cancelled policies

City watchdog the Financial Conduct Authority (FCA) warned in the summer that it expected insurers to deliver a fair outcome for customers who cannot use their policies.

But Money Mail has found policyholders are facing a refund lottery, with some companies happy to pay up, others only offering vouchers, and some refusing point-blank.

Can’t go away or get a Refund

More than half of Britons had travel insurance policies in place before the first lockdown, according to insurance finance firm Premium Credit. But the pandemic meant many have been unable to go abroad.

Customers are entitled to a full cash refund for flights and package holidays if the company they were booked with cancels the trip, under EU law and package travel regulations. Several travel firms are offering vouchers or the chance to reschedule with no booking fee.

It means millions of customers have been left with travel insurance policies they no longer need. In these cases the FCA has told insurers to treat customers fairly, giving them until early December to decide on what action to take.

But insurer More Than is still refusing to refund any premiums paid on annual policies if the customer cancels after the 14-day cooling-off period.

And the AA is only offering 65 per cent refunds on premiums to its multi-trip customers who cannot travel due to Covid restrictions.

Gary Rycroft, a consumer law specialist, says those denied partial refunds for annual cover may have a legal case for frustration of contract.

He says: ‘The insurer may say you could have still travelled at a different time, or to a less-restricted area. But if you had certain trips booked you could no longer go on, you could argue that you deserve a refund.’

Voucher offer but no cash

Staysure and Avanti are offering some customers a partial credit refund on annual cover that must be spent on a new policy.

Meanwhile, AllClear is giving larger refunds to customers who take vouchers over cash. 

Those annual-cover customers who have made no claims will get 5 per cent refunded for every unused month they have left. Customers who opt for vouchers will get another 20 per cent.

Grounded: Customers are entitled to a full cash refund for flights and package holidays if the company they were booked with cancels the trip

Grounded: Customers are entitled to a full cash refund for flights and package holidays if the company they were booked with cancels the trip

Grounded: Customers are entitled to a full cash refund for flights and package holidays if the company they were booked with cancels the trip

Money handed back to some

Insurance giants AA, Axa Direct and Saga won’t refund customers with an annual policy if they’ve travelled during the cover period. 

Ian Rudd took out Saga insurance in October last year costing £1,007. The retired financial adviser took a two-week trip to Cambodia and Vietnam with his partner Jenny Kelly, 73, in February.

Lockdown restrictions were imposed soon after their return and the Foreign Office began advising against all but essential travel in March.

When Ian, 78, called Saga to cancel his policy in April, he was told he would not get a refund because he had travelled. 

Yet Jenny’s insurer, Direct Line, fully refunded her £168. Saga eventually offered Ian £150 in compensation, but he is still more than £800 short.

The father-of-three, from Cumbria, says: ‘We have no idea when we can travel again. Saga should be looking at this from a moral point of view.’

A spokesman for Saga says: ‘Mr Rudd has used his travel insurance policy to go abroad. As a result of that, no refund can be made.’ 

James Daley, of campaign group Fairer Finance, says: ‘Clearly, these companies should be doing the right thing and offering pro-rata refunds, even if someone has travelled.’

Stuck with a useless policy

Firms, including LV=, More Than and Allianz Assistance are all paying out full refunds for cancelled single-trip policies,

AllClear, in contrast, will only cough up half.

Aviva and AA customers unable to take their holidays owing to Covid restrictions will also only get a partial refund.

Customers with Axa Direct who took out insurance policies before March 13 can only claim for a pro-rata refund or change the dates of their cover.

However, if they bought the travel policy on or after this date and wanted to cancel, they can only claim up to 65 per cent of their money back.

More than half of Britons had travel insurance policies in place before lockdown came into force in March

More than half of Britons had travel insurance policies in place before lockdown came into force in March

More than half of Britons had travel insurance policies in place before lockdown came into force in March

…yet renewal quote rising?

Guy Arnel decided not to renew his cover after Aviva hiked his annual premium by 185 per cent in July. 

The contract manager, 42, paid £88.57 for multi-trip cover for himself, his wife and their daughter.

But Aviva quoted the family £252.74 to renew, even though they had made no claims. Guy, from Ascot, says: ‘I thought it was some kind of a joke.’

An Aviva spokesman says factors, such as rising healthcare costs, have led to an increase in premiums across the industry. 

An Association of British Insurers spokesman says travel insurers expect to pay customers a record £275 million for trips cancelled due to Covid-19.

An FCA spokesman adds: ‘Where products no longer deliver the intended value, firms have flexibility to determine what action to take, as long as this delivers a fair outcome for customers. 

‘We will continue to supervise this, and expect firms to be able to demonstrate how they have met their obligations and treated customers fairly.’

f.parker@dailymail.co.uk


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