'Vulnerable' traveller loses dispute over damaged sleep machine

A complainant who challenged his insurer’s decision to partially cover a damaged CPAP machine has lost his claims dispute.

The man lodged a claim under his domestic travel policy on August 4 last year after the machine and an external hard drive were damaged. CPAP stands for continuous positive airway pressure, and machines can be used to treat sleep apnoea.

NIB Travel Services did not dispute that the machine had malfunctioned and offered the claimant $500. It did not cover losses to the hard drive because it did not fit within the policy’s reach.

The insurer said the maximum liability limit provided by the policy for damaged or lost luggage was $500 unless the policyholder elected to specifically list an item for a higher amount.

The claimant said the machine was worth more than the amount offered and that he was misled into believing that NIB would cover all the costs.

He told the Australian Financial Complaints Authority (AFCA) that the insurer advised him over the telephone that the machine was covered for its total replacement value. The man said that if he had known it wasn’t completely covered, he would have taken steps to ensure it was.

But AFCA said without a recording of the call, it was reliant on the policy documents to guide its decision.

It said the insurer did not mislead the claimant about how much liability it covered, which was clearly stated within the policy’s product disclosure statement.

“The insurer fulfilled its disclosure obligations to the complainant in providing him with the PDS which clearly sets out that the CPAP machine as a single item is covered for $500,” AFCA said.

“The complainant has not established that any conduct on the part of the insurer led him to misunderstand a material term of the insurance policy, namely that the CPAP machine was fully covered.”

AFCA backed NIB’s decision not to cover the damaged hard drive because it was caused by a software issue, which was excluded from the policy.

The ruling required the insurer to pay compensation of $500 for its handling of the claim, noting issues in its communication and response.

It said it was “not good industry practice” for NIB not to take action on the claim until two months after it was lodged and only after the man, who was a vulnerable consumer, had filed a complaint to AFCA.

AFCA said that the man suffered from sleep apnoea and was not able to sleep properly without the machine.

“Due to the nature of the complainant’s disability and the subject of the claim, the delay has had a serious impact on the complainant,” AFCA said.

Click here for the ruling.