Loss and claims

The providers of package tours and holidays are required by English law, implementing an EU Directive, to provide security in the event of cancellation, which may be in the form of insurance. The decision of Teare J in All Leisure Holidays Ltd v Europaische Reiseversicherung AG and Ors [2011] EWHC 2629 (Comm) is the first reported case on a policy of this type, and raises wider issues of the meaning of loss and the scope of claims obligations.

All Leisure: the facts

Hebridean International Cruises Ltd (HICL) was the owner of the cruise ship Hebridean Princess. The vessel was used to provide cruises to the Hebrides and other islands off the Scottish coast. HICL obtained from the defendant insurers a Passenger Protection Insurance Policy in order to allow it to meet its obligations under the Package Travel, Package Holidays and Package Tours Regulations 1992, the effect of which was to require the organiser of a package to offer a substitute package if the original was cancelled. The policy was in HICL’s name but was obtained on behalf of ‘insured persons’, defined as ‘persons who had made a payment to HICL with a view to entering into a travel contract with HICL’. The insurance stated that it would ‘indemnify the Insured Persons in respect of their net ascertained financial loss sustained arising from the cancellation or curtailment of the declared trip travel arrangements arising solely from the event of the insolvency of [HICL]’. The phrase ‘Net ascertained financial loss’ was defined as including ‘loss of deposit or charges paid in advance by the Insured Persons to [HICL]’. Loss had to be proved to the satisfaction of the insurers.