Grey areas in travel insurance policies have emerged after Travel and Personal Underwriters (TPU)initially refused to pay out a claim for a premature baby. The case came to light last month when a mother gave birth to her daughter 13 weeks early while on holiday in the US.The child was born with an underdeveloped heart and her care was costing £3,000 a day.

The parents were under the impression their travel insurance policy from Insure and Go, under- written by TPU, would cover the bill.

They were subsequently told that the child's care would not be covered because she was not named on the policy. A spokeswoman for TPU confirmed this information was sent in a fax to the assistance company International Medical Rescue (IMR).

The spokeswoman said this exclusion still remained, but TPU was pursuing "other avenues "to help the parents.

"Our paramount concern was for the baby so we tried to see if the US would pick up the costs because the child had dual nationality," she said. "We were seeing how far we could go down that route."

The ABI confirmed that the insurer was now dealing with the claim.

A spokesman said: "This case highlights the fact that pregnant mothers need to check the details of their travel insurance carefully. "He suggested there were some grey areas highlighted in this case, which needed clarification.

Sales and marketing director for intermediary Intergroup Mike Ramsay said that it would have covered this claim in all the policies it dealt with.

"As long as the date of confinement is not within eight weeks and there has not been a history of premature births, we would accept the claim," he said. Another industry source said under- writers do not necessarily exclude in this situation.
"You can't name a baby on a policy before it's born," he said.

The million dollar baby
Cornhill had to foot the bill in the most expensive holiday birth in the UK travel insurance industry.

The baby girl, Hailey James-Gannon, was born four months premature in November 1992,weighing only 1lb 9oz.Doctors said she had only a 30%chance of survival.

Her parents, Keith and Paula from Lydiate, Merseyside, had married in May 1992 and flown to Orlando, Florida for a late honeymoon, and Hailey was born two days into the holiday.

The travel insurance they took out cost £86.20.The total claim came to £800,000 ($1,132,000 at the 1993 exchange rate), which covered medical expenses, an ambulance helicopter to take Paula to hospital, an apartment in Orlando for the parents and a hire car.

The hospital was the Arnold Palmer Memorial Hospital, Orlando, Florida The cover that was taken out was the Travelcover policy, which offered cover for medical expenses up to £1m per person.