Cancelled cruise credit use?

[Willyworm]

Hi all

I have a quick question on cruise line future cruise credit that I would appreciate any legal advice on...its a bit different from the usual.

My wife and I were due to go on a cruise last year that got cancelled due to the Covid outbreak. The cruise line refused to refund us the cash and offered us a future cruise credit, which we didn’t want as none of their cruises suited us. But they still gave it to us anyway. We claimed foe the cost of the cancelled cruise on our insurance, who were excellent and paid up the full cost of the cruise. Nice result.

Now 9 months later we have spotted a cruise with the original company that looks nice and we would like to book it. The company says we still have the unused credit and can use this to pay for almost all of the cruise.

Simple question is would there be any legal issues by using the credit having had a cash payout from the insurance company?

Thanks in advance

Ww

[scrumpyjack]

Yes I think it would be unlawful. You should declare the situation to the insurer and see what they say.

[Dod101]

I am slightly surprised that you even need to ask. The claim on your insurers was fraudulent in that you had already been compensated for your loss, just not in cash. You may say that your insurers did not ask if you had received a credit but I think they were entitled to assume that you were being honest in your claim. Utmost Good Faith is still the basis of all insurance transactions as far as I am aware and, I am sorry to say, you broke that fundamental tenet.

You need to return the insurance monies to them pronto.

Dod

[scrumpyjack]

The reason for this is that a contract of insurance requires what the law calls 'Utmost Good Faith', so the policyholder and the insurer have to be completely open with each other. Not declaring a subsequent recovery in respect of an insurance loss would, IMO, be a breach of this principle.

https://www.investopedia.com/terms/d/do ... dfaith.asp

IANAL but I have been involved in insurance in the long distant past

[scrumpyjack]

I am slightly surprised that you even need to ask. The claim on your insurers was fraudulent in that you had already been compensated for your loss, just not in cash. You may say that your insurers did not ask if you had received a credit but I think they were entitled to assume that you were being honest in your claim. Utmost Good Faith is still the basis of all insurance transactions as far as I am aware and, I am sorry to say, you broke that fundamental tenet.

You need to return the insurance monies to them pronto.

Dod

Sorry Dod, had not seen your post on uberrimae fidei when I posted mine.

To be fair to the OP, he may have disclosed to the Insurer, when making the claim, that he had been given a credit which he believed was of no value to him. That is certainly what should have been done.

But now that the credit has turned out to be of value to him, if it has(!), he should disclose this to the Insurer and ask what they want done.

[Willyworm]

Thanks Both, but just to be clear the original claim was not fraudulent. We told our insurance company about the credit offer but said we didn’t want to accept it as we had no intention of using this specialist cruise company again, hence they paid out cash. Which is what insurance is there for. Only now are we considering using the same company as circumstances have changed.

[SteelCamel]

I think the insurance company still needs to know. The question is how much loss you have suffered. If you lost the cruise and were given a completely useless credit instead, the loss is the full value of the cruise. If the credit isn't useless, the loss is the difference between the cost of the cruise and the value of the credit (which isn't necessarily its face value - a credit is restricted in what it can be used for, unlike cash, so may be less that the face value).
If the new cruise is equivalent to the original, or better, then yes you will need to pay back all the money, as you haven't lost anything. If the new cruise is worse in some way you'd most likely be entitled to the difference in value (not price) from the insurance.
Insurance cannot be used to put you in a better situation than before you suffered the loss, or it's no longer insurance.

[Dod101]

All the insurance professionals are coming out today (Including me !) I will get off my high horse, but would say that if the OP uses the credit which he holds and also pockets the insurance proceeds without telling his insurers that would be fraud or at least dishonesty. The OP might be lucky and find that it is just too much trouble for the insurer to do anything, but I still think that the OP should refund the insurance money if, that is, he got a full refund in the form of an unrestricted credit to the value of the original booking.

Dod

[Arborbridge]

Thanks Both, but just to be clear the original claim was not fraudulent. We told our insurance company about the credit offer but said we didn’t want to accept it as we had no intention of using this specialist cruise company again, hence they paid out cash. Which is what insurance is there for. Only now are we considering using the same company as circumstances have changed.

I think it's one of those events where you were not fraudulent at the time, but are being lured into being naively fraudulent now. The trouble is, that having asked and received a clear answer, you can't "unknow" the fact. And you were probably thinking you were just lucky.

It reminds me of one of those Basil Faulty episodes where at last he thinks he has won something, but finds out he hasn't.

Arb.

[Arborbridge]

I think the insurance company still needs to know. The question is how much loss you have suffered. If you lost the cruise and were given a completely useless credit instead, the loss is the full value of the cruise. If the credit isn't useless, the loss is the difference between the cost of the cruise and the value of the credit (which isn't necessarily its face value - a credit is restricted in what it can be used for, unlike cash, so may be less that the face value).
If the new cruise is equivalent to the original, or better, then yes you will need to pay back all the money, as you haven't lost anything. If the new cruise is worse in some way you'd most likely be entitled to the difference in value (not price) from the insurance.
Insurance cannot be used to put you in a better situation than before you suffered the loss, or it's no longer insurance.

Can you clarify: I take that to mean if the new cruise is identical, but costs more - the insured is entitled to the difference in price.

Arb.

[dealtn]

Thanks Both, but just to be clear the original claim was not fraudulent. We told our insurance company about the credit offer but said we didn’t want to accept it as we had no intention of using this specialist cruise company again, hence they paid out cash. Which is what insurance is there for. Only now are we considering using the same company as circumstances have changed.

I had similar 2 years ago, nothing to do with Covid.

Claiming on travel insurance after my daughter had a fall and broke a bone necessitating coming home early, and not using the originally planned ferry crossing. The ferry company offered a credit note, not a refund. The credit note was unlikely ever to be used so wasn't our preferred solution. The travel insurance were happy to make a cash settlement but required a letter confirming the credit note had been withdrawn by the ferry company. Settlement occurred once this had been produced.

[AF62]

The insurance professionals will know the answer to this, but wouldn't the insurance company have already sought to recover their loss from the cruise line given they had a legal obligation to refund?

If they have, then is the credit note actually valid.

[Dod101]

dealtn has produced what would surely be the 'correct' way to deal with the situation.

The OP has presumably led his insurers to believe that he turned down the offer of the credit but clearly he did not otherwise he would not have posted initially as he has. As I said, to use the credit note and keep the insurance proceeds would be fraudulent. There is no other way to look at it.

There are no 'Yes, buts' involved. It is very black and white. Properly he should return the insurance proceeds to the insurers. An alternative would be to return the credit note to the cruise company but he can't have both. Contrary to what Steel Camel has said, I think that whatever new cruise the OP chooses is irrelevant.

Dod

[Arborbridge]

dealtn has produced what would surely be the 'correct' way to deal with the situation.

The OP has presumably led his insurers to believe that he turned down the offer of the credit but clearly he did not otherwise he would not have posted initially as he has. As I said, to use the credit note and keep the insurance proceeds would be fraudulent. There is no other way to look at it.

There are no 'Yes, buts' involved. It is very black and white. Properly he should return the insurance proceeds to the insurers. An alternative would be to return the credit note to the cruise company but he can't have both. Contrary to what Steel Camel has said, I think that whatever new cruise the OP chooses is irrelevant.

Dod

Is your answer still as black and white if the insurance company says: "fine, go ahead: claim the credit and you have no need to reimburse us"? Unlikely, I agree, but it wouldn't then be fraudulent.

BTW, I'm not completely sure we can judge whether the original event was fraudulent - or at least deliberately so - without knowing the actual conversations and questions on the forms. I'd give the OP at least that much slack, though it's difficult to see any insurance company allowing this procedural hole to develop.

[Dod101]

It does not sound as if the OP had any intention of defrauding anyone. It is rather like what you said earlier, he sort of fell in to it, but having done so he must extricate himself with honour, and that has to be by either refunding the insurers or at the very least returning the credit voucher to the cruise company and advising them that he has no intention of using the voucher.

Does that sound unreasonable? I think not.

Dod

[UncleEbenezer]

One little dodge that might leave you both in pocket and virtuous here.

Email the insurer a brief note explaining, and ask them for advice. If they get back to you then do as advised (assuming it's at least reasonable). But if you get no reply - which may be quite likely if your note doesn't fit their standard scripted processes - you've done your best and the ball's in their court.

I don't know where you stand legally with that, but I have a similar situation with an organisation (not an insurer) that has a direct debit mandate but has never taken money on it. If one day they turn round and demand the money I'll pay, but if they want penalties I'll dispute it and demonstrate I've made my best efforts.