Direct Line, one of Britain’s biggest travel insurers, is asking the customers to approach the banks for refunds for the cancelled holidays if they have paid on a credit or debit card. The insurer is telling policyholders who could not travel because of the virus that they must first try to claim cash back from their card provider. It also asked for proof that they sought refunds from the travel provider.
In a rejection letter to one policyholder, the insurer said: “We are unable to cover this claim as you have paid for the trip by a credit card and the credit card company should be able to reimburse you as they have a greater duty of care to recover any costs.” The Financial Conduct Authority, which regulates insurers, says Direct Line should not be making customers go to the card issuer first but was unable to say what it might do to stop this.
Holidaymakers are owed billions of pounds for unused trips, with travel providers refusing or delaying refunds or offering only credit notes. If a provider cancels a trip and refuses a refund, those who paid by credit card can claim back the cost from their bank under the Consumer Credit Act. Those who paid by debit card can use the “charge back” scheme run by Visa and Mastercard.
Direct Line appears to be encouraging policyholders to admit to paying with a debit or credit card by saying it will not affect the claim only to use this information for exactly that. In the online claims process, it states: “We just need to know if you paid using a credit or debit card. Giving us this information won’t delay or affect your claim, it’s simply to help us identify if we can seek contributions from other insurers.”
Direct Line says it is within its rights to ask customers to go to their bank first because the small print of policies excludes paying out recoverable costs. It said: “We are not in contravention of any FCA guidelines. Our reason for asking customers their payment method is to assist our claims handlers so that they can identify other potential routes of recovery.”
