School Travel Cancelled amidst COVID-19 and Insurance Claims

Moores has been assisting many of its school clients which are looking to recoup money paid for trips which have been cancelled due to COVID-19.

Apart from disappointment, many families and students find themselves out of pocket at the worst possible time, with many students having contributed to their own costs via part time jobs and fundraising initiatives.

In a recent success story, Moores was able to support a school to the point where an insurer, which had refused the school’s claim, decided it would reverse the denial of claim.

Initially, the travel company refused to refund the deposits which the students had paid. This was despite the fact that, quite clearly, nothing had been booked by the travel company.

The students were insured under a travel insurance policy which had been arranged by the travel company, however the insurer denied the claim, stating the students were not covered under the policy.

Through careful analysis of the policy, it became clear the students were covered and thus entitled to money for loss of their deposits. The insurer in question capitulated.

This experience shows that schools and others should not take a denial of insurance indemnity at face value.

It is important to ensure that you carefully read policy wording and seek legal advice when your indemnity position is unclear. This action could result in acceptance of an insurance claim and ultimately recovery of (hard-earned) deposit monies.

Tips for claiming on your school’s travel insurance

Cancellation clauses

If planning trips in the future, ensure you read the booking terms and conditions carefully, paying particular attention to the cancellation clause. Some cancellation clauses for travel providers can be overly onerous and do not provide any refund, even if the trip is cancelled due to circumstances beyond your control ie COVID-19. It is important to be mindful of these terms when negotiating an agreement for travel.

Australian Consumer Law provides some protection for overly onerous and unreasonable cancellation clauses, stating that cancellation costs should only be due to the “reasonable costs” that the travel provider has incurred and they cannot be excessive. If fees do not reflect reasonable costs, they can be viewed as a penalty.

If you believe you have been charged an excessive cancellation fee, you are able to make a claim with Consumer Affairs Victoria. Although, we recommend you engage with the travel provider in the first instance to try to negotiate a resolution prior to making a claim.

Travel Insurance

It is customary for travel companies to arrange travel insurance on behalf of travellers. Depending on when travel insurance was arranged, COVID-19 may or may not be covered by the policy. Pandemics and epidemics are often excluded in travel insurance policies. If you were insured before COVID-19 was declared a pandemic on 11 March 2020, you may be covered.

If a pandemic is not covered under the policy, you are at risk of not being covered (and thus out-of-pocket) for the following expenses:

  • loss of deposits due to cancellation caused by COVID-19; and/or
  • medical expenses which may be incurred due to COVID-19.

We therefore recommend requesting a copy of the product disclosure statement for the insurance policy so you can ascertain exactly what the travellers are covered for and then assess your risks in relation to the trip. Some insurance policies do provide coverage for “circumstances outside the insured’s control” which may cover expenses related to COVID-19, however coverage is not guaranteed.

Furthermore, we are aware of insurers denying liability for claims related to COVID-19 and even going so far as to put notices on their websites stating that their policies do not apply to COVID-19. In some instances, these statements can be misleading, so we recommend seeking legal advice if you think you should be covered under a policy and the insurer has denied your claim.

How we can help

If you require assistance with reviewing agreements with travel providers or advice in relation to travel insurance coverage, please do not hesitate to contact us.