An insurer has been ordered to increase a compensation offer after incorrectly telling a traveller her policy did not cover a pre-booked husky sledding tour in Finland.

Southern Cross Benefits offered $1000, but the Australian Financial Complaints Authority says $3000 is justified after the traveller had to cancel the trek over fears she would be uninsured for accident or injury.

However, AFCA has rejected the woman’s demand for a payment covering the full cost of another trip to Finland, because this would not be “proportionate to her missed experience”.

The traveller contacted Southern Cross last December to check if dog sledding was covered under her comprehensive travel insurance policy. She was told it was excluded because it was an off-piste winter sport and an extreme activity.

She later asked to have her query “escalated to underwriting and management”, but the insurer acknowledged this did not happen. Two customer service representatives incorrectly advised the woman the activity was not covered.

The insurer later accepted the sledding tour was covered and apologised for providing incorrect information.

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The traveller sought between $6000 and $15,000 to cover the cost – including fares and accommodation – of returning to Finland to undertake the activity.

However, AFCA says the policyholder suffered no direct financial loss from cancelling the tour, because she was fully reimbursed.

The ombudsman notes husky sledding was one of several activities booked during an extended trip across multiple countries.

The woman continued using prepaid travel and accommodation, meaning those expenses could not be considered losses caused by the insurer’s advice.

But AFCA concludes the insurer’s “poor claims advice has plainly caused an unusual degree of stress and inconvenience”, warranting the increased settlement of $3000.

See the full ruling here.