Account of the case

According to the traveller’s insurance claim dated 15 July 2018, the customer’s flight from Memphis to Toronto was cancelled due to a thunderstorm. The flight was supposed to leave Memphis on Saturday 15 July 2017 at 18:15 and arrive in Toronto on Sunday 16 July at 00:15 after a stopover in Charlotte. A replacement flight to Toronto was arranged on the following day. The flight left Memphis on 16 July at 06:50 and arrived in Toronto at 13:30 after a stopover in Philadelphia.

The customer made a claim for compensation from his traveller’s insurance policy, concerning the extra accommodation expenses in Memphis due to flight cancellation and the unused travel services. In addition, the customer claimed compensation for a hotel night in Toronto that he had paid for in advance but could not use.

The insurance company gave a compensation decision on the matter, dated 21 September 2018, saying that it would reimburse extra accommodation expenses and unused travel services for a total of EUR 175,60 under the Missed Departure Cover. The insurance company did not reimburse the cost of the unused hotel accommodation in Toronto.

The customer was dissatisfied with the compensation decision and appealed it with the insurance company’s internal appeals body on 20 September 2021. The customer claimed that the hotel night in Toronto that was bought in advance and was not used due to the flight cancellation should have been compensated under the traveller’s insurance.

According to the compensation decision by the insurance company’s appeals body, dated 22 September 2021, the accommodation at the destination was not a travel service within the meaning of clause 11.3 of the terms and conditions, which encompasses vehicle rents, fees for local trips and courses and event entrance fees related to the journey in question which the insured has paid in advance. The hotel accommodation in Toronto was thus not compensated as an unused travel service.

According to the insurance company, accommodation expenses at the destination would be taken into account when calculating the share of the journey price representing the travel days lost due to the missed departure. However, the customer was not entitled to compensation for the travel days lost, because under the terms and conditions, lost travel days were calculated as full 24-hour periods, and the delay did not exceed 24 hours. The insurance company did not change the compensation decision.

Customer claims at FINE and the opinion of the Service Provider

The customer is dissatisfied with the insurance company’s compensation decision and has asked FINE to issue a recommended solution. The customer demands that the insurance company should pay EUR 85.52 for the unused hotel accommodation of 15 to 16 June 2017. In the customer’s view, the insurance should cover the journey, accommodation or service that was paid in advance but was not used because of the missed departure i.e. the cancellation of a flight in this case.

In its response, the insurance company refers to the earlier compensation decisions and repeats the reasoning explained in them.

Policy Terms and Legislation

Under Section 11 of the applicable traveller’s insurance terms and conditions (effective as of 1 January 2017), Missed Departure Cover, clause 11.3, Coverable expenses, the following are compensated from the Missed Departure Cover:

• insured person’s reasonable extra travel and accommodation costs that are necessary to continue the journey to the destination or back to Finland to the final destination according to the original itinerary
• travel services at the destination bought separately in advance that were not used because the insured person missed his departure
• the share of lost travel days of the journey price owing to missed departure, or the entire price of the journey if, owing to the missed departure, it is no longer possible to take the journey.

By extra travel and accommodation costs we refer to costs caused to the insured in addition to those paid in advance.

By travel services we mean vehicle rents, fees for local trips and courses and event entrance fees related to the journey in question which the insured has paid in advance.

The price of the journey is considered to be the previously bought travel tickets and the insured person’s part of previously paid-for accommodation expenses or the price of a package tour or special package tour. Separately paid travel services are not included in the calculation of the journey price. A package tour is defined here as a journey which is subject to the general terms and conditions of package tours and the Package Travel Act. By special package tour we mean a journey to which also the tour organiser’s special conditions are applied.

Journey days are calculated as full 24-hour periods from the time the insured should have arrived at the travel destination according to the original itinerary to the scheduled departure time of the latest means of transport to which the insured had already bought a ticket. Lost travel days are calculated as full 24-hour periods from the time when the insured should have arrived at the destination according to the original itinerary to the time when he actually arrived there.

If the insured has not already bought a ticket to leave the destination when the reason for the missed departure becomes apparent, the share of lost travel days of the journey price will not be compensated.

Decision

This case concerns the question of whether a hotel night that was not used at the destination because of a cancelled flight should be compensated under the Missed Departure Cover of the traveller’s insurance policy.

Under the policy terms and conditions, the Missed Departure Cover compensates the insured person’s reasonable extra travel and accommodation costs that are necessary in order to continue the journey to the destination or back to Finland to the final destination according to the original itinerary, travel services at the destination bought separately in advance that were not used, and the share of lost travel days of the journey price owing to missed departure or the entire price of the journey if, owing to the missed departure, it is no longer possible to take the journey.

Extra accommodation costs refer to costs caused to the insured in addition to those paid in advance. FINE observes that a hotel accommodation at the destination that was paid for in advance thus does not constitute extra accommodation costs within the meaning of the terms and conditions. It also does not constitute a travel service as defined in the terms and conditions, meaning vehicle rents, fees for local trips and courses and event entrance fees related to the journey in question which the insured has paid in advance.

According to the information presented to FINE in the case, the customer reached Toronto approximately 13 hours later than he was supposed to arrive at the destination according to his original travel plan. Lost travel days are calculated as full 24-hour periods from the time when the insured should have arrived at the destination according to the original itinerary to the time when he actually arrived there. The price of the unused hotel night thus cannot be compensated on the basis of the share of the journey price representing the travel days lost by the customer, either.

FINE observes that the expenses compensable from the insurance policy are those defined as compensable in the policy terms and conditions. In the case at hand, the expense incurred by the customer due to the hotel accommodation that was not used owing to the flight cancellation is not compensable from the Missed Departure Cover under the terms and conditions. Based on the foregoing, FINE finds that the insurance company’s compensation decision is in compliance with the policy terms and conditions.

Final outcome

FINE does not recommend a change to the insurance company’s decision.

FINE
The Finnish Financial Ombudsman Bureau

Head of Division Hanén
Presenting Official Penttilä