Not upheld: claim settlement calculation and policy interpretation complaint against Red Sands Insurance Company (Europe) Limited

Decision detail

Summary

Ms G claimed on a travel insurance policy for change of itinerary after her cruise ship missed a port due to bad weather. She expected to receive £250 per person (£750 total for three policyholders) but received £549.57 instead, calculated on a pro-rata basis for one day of disruption on a seven-night cruise. The ombudsman examined the policy wording and found that £250 was specified as the maximum sum insured per person, not a fixed amount, and that the pro-rata calculation method was reasonable and in line with the policy terms. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman examined whether Red Sands acted in line with the policy terms and conditions. The policy wording clearly indicates that £250 is the maximum sum insured per person, not a fixed amount to be paid in all cases. The pro-rata calculation (dividing the cost per person by seven nights to determine loss for one day of disruption) is a reasonable and proportionate method of settling the claim. Although the policy administrators provided confusing information stating £250 was typically fixed, the correct amount had already been communicated to Ms G, and the settlement was in accordance with the policy terms.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website