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Travel insurance is designed to provide peace of mind by covering unexpected events such as medical emergencies, trip cancellations, and lost luggage. However, the effectiveness of a travel insurance policy can be undermined by “rubbery terms”—vague or ambiguous clauses – that can lead to confusion and disputes. Understanding these terms is crucial for Australian travellers to ensure they are adequately protected.

What Are Rubbery Terms?

Rubbery terms refer to vague, broad, or ambiguous language in insurance policies that can be interpreted in multiple ways. These terms often create uncertainty about the extent of coverage and the conditions under which a claim will be paid. Common examples include phrases like “reasonable care,” “unforeseen circumstances,” “medical necessity,” and “pre-existing conditions.”

Common Rubbery Terms in Travel Insurance

1. Reasonable Care: This term often appears in policies related to theft, loss, or damage of personal belongings. It requires policyholders to take “reasonable care” to protect their possessions. However, what constitutes reasonable care can be subjective. For instance, leaving your luggage unattended at an airport might be seen as failing to take reasonable care.
2. Unforeseen Circumstances: Many travel insurance policies cover cancellations due to “unforeseen circumstances.” This term is inherently vague, as what is unforeseen to one person might be foreseeable to another. Insurance companies may interpret this in a way that limits coverage, for instance, denying claims for cancellations due to common travel disruptions like airline strikes or political unrest if they argue these events were foreseeable.
3. Medical Necessity: Coverage for medical expenses often hinges on the treatment being deemed a “medical necessity.” This term can be ambiguous and subject to the insurer’s interpretation, potentially leading to disputes over whether certain treatments or procedures are covered.
4. Pre-existing Conditions: Policies usually exclude coverage for pre-existing medical conditions unless they are disclosed and accepted by the insurer. However, the definition of what constitutes a pre-existing condition can be broad and include conditions that were asymptomatic or undiagnosed before the policy was purchased.

Legal Protections and Remedies

Many members of the legal profession have long called for amendments to the Insurance Contracts Act 1984 (Cth), to better regulate unfair contract terms or “rubbery” clauses. A large number of claims have been overturned on review, on the basis of unfair or ambiguous contract terms.

Under the Insurance Contracts Act 1984 (Cth) and the Australian Consumer Law (ACL), insurers are required to act in good faith and provide clear, unambiguous information about the coverage they offer.

If you feel a claim has been unfairly denied based on a rubbery term, you have several avenues for recourse.

1. Internal Dispute Resolution: Initially, you should file a complaint with the insurer’s internal dispute resolution (IDR) department. Insurers are obligated to handle complaints fairly and efficiently.
2. Australian Financial Complaints Authority (AFCA): If the issue is not resolved through IDR, you can escalate it to the AFCA. This body provides free and independent dispute resolution services for consumers and can review and resolve disputes between policyholders and insurers.
3. Legal Action: In some cases, it may be necessary to seek legal advice and consider taking the matter to court. Carroll & O’Dea Lawyers specialises in insurance law and can provide guidance on whether commencing court proceedings is a viable option. You can use our Travel Insurance Claim Check at any time here.

Tips for Navigating Rubbery Terms

• Read Your Policy Carefully: Thoroughly review the terms and conditions of your travel insurance policy, paying close attention to any vague or ambiguous language.
• Ask for Clarification: If any terms are unclear, ask your insurer for clarification in writing. This can help prevent misunderstandings later.
• Document Everything: Keep detailed records of all communications with your insurer including reference numbers, as well as any evidence related to your claim.
• Seek Professional Advice: If you encounter difficulties, consider seeking advice from Carroll & O’Dea Lawyers.

Conclusion

Rubbery terms in travel insurance policies can create significant challenges for Australian travellers. By understanding these terms and knowing your legal rights and remedies, you can better protect yourself and ensure your travel insurance provides the coverage you expect. Stay informed, ask questions, and don’t hesitate to seek contact Carroll & O’Dea if you encounter issues with your policy.

This article was published on 5 November by Carroll & O’Dea Lawyers and is based on the relevant state of the law (legislation, regulations and case law) at that date for the jurisdiction in which it is published. Please note this article does not constitute legal advice. If you ever need legal advice or want to discuss a legal problem, please contact us to see if we can help. You can reach us on 1800 059 278 or via the Contact us page on our website.