Investigator: can you claim from two travel insurers for the same thing?

Can you get twice the pay-out on a travel insurance policy if you happen to have two insurances?

Australian Business Traveller reader Robert Z found himself in this situation recently, after he had some medical issues requiring treatment while overseas.

He realised that although he had a stand-alone travel insurance policy, he was also entitled to free international travel insurance provided by his gold credit card.

I am writing to you after reading your recent article about Zurich denying a travel insurance claim in error.

I recently came back from a trip overseas during which I had to see a doctor and have some tests done. During the same trip I also had to pay for a helicopter ride to get out of a remote area, as a scheduled flight from the area was cancelled.

Before departing, I purchased a stand-alone travel insurance policy from Worldcare.

I also paid for my air tickets in full on my Commonwealth Bank Gold Awards Credit Card, which offers free international travel insurance with Zurich.

I made my claim to both insurance companies (disclosing to both that I had two travel insurances) and I received a full reimbursement of $1056.24 from Worldcare.

Zurich, however, declined my claim, six weeks after I submitted it, saying I was not entitled to claim from them as I had already received reimbursement from another company.

The agent was unable to point out anywhere in Zurich's insurance policy that states it will not pay a claim if another insurer has done so, and simply maintained that I was not entitled to compensation.

I looked through the insurance's policy wording, and could not find anything stating that I am not covered if another insurer is covering me as well.

Australian Business Traveller contacted Zurich Financial Services to ask them to investigate Robert's case.

Zurich Communication Manager, Rob White, advised that "double insurance" was not possible under Australian insurance law -- at least, in the context of getting twice the payout for the same loss.

White explained that if a person holds two insurance policies with identical coverage, the two insurers will jointly cover the claimed amount, sharing the cost between them, but the will never pay out more than 100% of the claimed amount between them. (For example, although one insurer might pay the whole claim to the customer, they may well then ask the other insurer for some of the money back.)

The only exception, he said, was with death or permanent disability benefits, in which case multiple insurers will pay out whatever their policy states they will offer, regardless of what other insurers have already paid out.

The case we investigated previously was for a death benefit, which is why Zurich had reversed its initial, incorrect advice to the reader that it could not pay out if another insurer had already paid.

So, in answer to the story's initial question: can you get paid out twice for the same loss on a travel insurance policy, the answer is no, you can't -- unless it's a death or permanent disability payout. In Robert's case, as the claim was for medical costs and flight cancellation, he is only able to claim back the costs he incurred once.

^{The real name of the reader has been withheld for privacy reasons.}

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danwarne