Service providers and reasonable expectations
Responsibility of insurer for service providers
An insurer will generally be responsible for the acts and omissions of any service provider acting as its agent.
In Ombudsman News 1 the FOS gives a striking example of the application of this general rule in the context of travel insurance. A married couple travelled to Madeira. Sadly, whilst there, the husband suffered a heart attack and died. The couple had effected a travel insurance policy that covered the holiday, and so the widow made a claim. An assistance company, appointed by the insurer, instructed a local firm of funeral directors to arrange repatriation of the body. Unfortunately, a series of errors meant that the body was not embalmed, and by the time it was returned to the UK it was too badly deteriorated to be viewed by the husband's mother. The FOS required the organisations involved to give an apology and to make donations to the British Heart Foundation.
Reasonable expectations
On occasion the FOS will effectively rewrite a policy to meet the reasonable expectations of the policyholder.
In a case reported by the FOS in Ombudsman News 1, an elderly couple were on holiday in Turkey when an earthquake affected the area. They slept on the beach for one night, and were then flown back to the UK by the tour operator. When they claimed for the curtailment of their holiday, the insurer correctly pointed out that the policy only covered curtailment resulting from specified events – such as the death, injury or illness of the policyholder, or burglary or fire affecting the policyholder's home in the UK. It did not cover curtailment caused by an earthquake in the holiday destination. The FOS nevertheless used its “fair and reasonable” approach to require the insurer to meet the claim. It pointed out that the restrictions in cover had not been highlighted and stated that:
In our view, when they took out the travel insurance as part of the holiday package, the policyholders would have envisaged that it would cover them for exactly the type of problem they had encountered.