There is a general exclusion clause which carries the exemption of the insurer for any event that might cause the covered trip to be cancelled or abandoned, which the insured had knowledge
by Dr. Ruwantissa Abeyratne
Writing from Montreal
The journey, not the arrival, matters
T.S. Elliott
It is hard to forget the plethora of flight cancellations around the world when the pandemic started spreading 6 months ago. This left many stranded in airports while others just could not embark on their trips which they had already paid for. Air carriers were helpless as they stood ready and able to fulfil their commitments, but countries had closed their borders. No one knew what to do or in what direction the onward march of the pandemic was taking and what devastation it would leave in its wake. Obviously, the virus had the capability of spreading both inside the aircraft as well as on the ground.
Some of the airlines which opted to cancel their flights when the pandemic broke out were British Airways, American Airlines, United Airlines, Air Asia, Air India, Cathay Pacific, IndiGo and Lufthansa.
In April 2020 The United States Department of Transportation issued an enforcement notice to airlines “clarifying, in the context of the 2019 Novel Coronavirus (COVID-19) public health emergency, that U.S. and foreign airlines remain obligated to provide a prompt refund to passengers for flights to, within, or from the United States when the carrier cancels the passenger’s scheduled flight or makes a significant schedule change and the passenger chooses not to accept the alternative offered by the carrier. The obligation of airlines to provide refunds, including the ticket price and any optional fee charged for services a passenger is unable to use, does not cease when the flight disruptions are outside of the carrier’s control (e.g., a result of government restrictions)”.
At this point most airlines were in a parlous state and all that the hapless carriers could do was to offer passengers future travel vouchers and options to convert to loyalty air miles. CTV news reported that one of the airlines which offered stranded passengers travel vouchers for future travel -West Jet - a Canadian airline announced “...airline tariffs do not always provide for cash refunds especially in cases beyond our control. WestJet believes refunding with travel credits is an appropriate and responsible approach in extraordinary circumstances such as the COVID-19 crisis.”
Strictly speaking, in a legal context, the stand taken by West Jet is correct, albeit of little comfort to the passenger who was left with no cash refund. The contract of carriage legally obligates the carrier only to carry the passenger safely rom an agreed place to another agreed place as stipulated in the passenger ticket. Although there is no guarantee of scheduled times for such carriage, the obligation to carry remains unextinguished. In the case of package holidays they usually carry an implied obligation for the package operator to reimburse within 14 days.
Fast forward to 26 July 2020 when the United Kingdom Government, startled by the sudden spike of Covid-19 cases in Spain, recommended against all but essential travel to mainland Spain including the Canary and Balearic islands, which forced the cancellation of thousands of pre-booked and paid for holidays. This measure which applies to returning British holidaymakers, and with effect from 26 July onwards to those arriving in England, Scotland, Wales or Northern Ireland from any part of Spain, including the Canary Islands and the Balearic Islands, such as Mallorca and Ibiza. Under the quarantine rules, arrivals must self-isolate in their home or accommodation for 14 days. It is here that travel insurance should kick in as ultimate relief to the passenger.
In the context of the European Union, Regulation 261/2004 most cancelled flights will fall under EU flight delay rules (which still apply this year despite Brexit, and cover all flights leaving the UK or EU as well as flights to the UK/EU on a UK/EU airline). The Regulation entitles a passenger to either receive a refund for the flight that was cancelled or be carried on an alternative flight (airlines call this re-routing) to the passenger’s destination. The airline is exempt in “extraordinary circumstances” beyond its control including but not limited to unavoidable security risks; political instability; airport or airspace closure; adverse weather conditions; birds flying into the engine; and strikes.
In the United States, The Department of Transportation has a requirement that a passenger is entitled to a refund if the airline cancelled a flight, regardless of the reason, and the passenger chooses not to travel. Furthermore, a passenger is entitled to a refund if the airline makes a significant schedule change and/or significantly delays a flight and the passenger chooses not to travel.
The Canadian Air Passenger Protection Regulations prescribe that airlines are required to pay passengers compensation for flight delays or cancellations that are in their control and not related to safety. Passengers are entitled to compensation based on the length of delay at arrival at their final destination.
Although such regulations are usually specific and unequivocally worded, receiving compensation often proves contentious and cumbersome. For this reason, many take the precaution of obtaining external travel insurance for flight cancellation or travel interruption.
This too might be tricky as most travel insurance policies would have an exclusion clause making the insurance policy void ab initio (initially void) or voidable in the face of a government advisory recommending that its citizens not travel to a particular destination. Leaving this aside, the travel insurance policy carries with it its own complications. Firstly, one must be aware that most, if not all travel insurance policies carry an exclusion clause exempting the insurer from liability for any event giving rise to a claim which is foreseen at the time of purchasing this insurance. This clause is not only ambivalent but also potentially contentious in the event of a claim under Covid-19, as in the unexpected but foreseeable measure taken on 26 July 2020 by the United Kingdom Government.
Often, there is a general exclusion clause which carries the exemption of the insurer for any event that might cause the covered trip to be cancelled or abandoned, which the insured had knowledge
of at the time of purchasing this insurance. This is extended to events related to travel warnings issued by Foreign Affairs of a country prior to the effective date of the policy that were or continue to be in effect for any country, region or city of destination on the trip as reflected in the travel itinerary.
There is also the “proximate cause” doctrine in insurance where the risk that is insured against must be causally related to the cause of the loss. However, courts have exercised some flexibility in interpreting this doctrine to mean that the risk insured against should not be the actual instrument of the loss. This doctrine applies subjectively, on a case by case basis, which Lord Dunedin in 1918 pronounced must be based on “common sense”. The burden of proving that the loss resulted from a proximate cause is on the insured. The insurer is not liable for loss caused by the wilful misconduct of the insured, on the principle that no person should profit from his own wrong.
On 31 January 2020 CNN said: “According to Sandberg, although some plans will provide for cancellation due to a traveler quarantine, this only applies to plans purchased before the outbreak became a "known event," which was around January 21. However, there may be some level of trip cancellation protection available to those who happen to have purchased a Cancel for Any Reason (CFAR) optional upgrade”.
Financially speaking, it might be worth in these times, not only to cover one’s nose and mouth but one’s backside as well.
Dr. Abeyratne was Head of International Relations and Insurance in an international airline before he joined the International Civil Aviation Organization which he served for 25 years. He is now an aviation consultant who also teaches aviation law and policy at McGill University.
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