An Australian exchange student who was assaulted while in the US has lost his bid for a travel cover payout because his medical costs were covered by an American health insurer.  

The University of Texas student suffered injuries that required urgent treatment. He incurred $US145,751 ($224,802) in related expenses, which his health insurer paid.

The victim sued his attackers and received an undisclosed settlement amount that included a $US97,167 ($149,868) medical lien paid to the health fund.

The student said AIG Australia – with which he was a beneficiary through his university – should pay him the medical lien, arguing the lawsuit was not intended to cover treatment costs.  

But AIG denied the claim, saying he had not suffered a loss covered by its policy.  

In a dispute ruling, the Australian Financial Complaints Authority backs the insurer’s decision, noting the claimant sustained no out-of-pocket medical expenses.  

It finds the medical lien “was paid directly from the settlement before the complainant received any remaining funds” and this suggests the student “was only entitled to the portion of the settlement that excluded the medical lien”.

AFCA added: “If this portion of the settlement monies was to compensate the complainant for the medical expenses paid by [the health insurer], then it seems appropriate they be directed to [it].

“If these monies were paid for another purpose, then they are not claimable under the policy.”

AIG has been told to pay $500 compensation because it did not provide updates on the claim’s progress for 64 days, from January 14 to March 15.  

“This appears inconsistent with the General Insurance Code of Practice requirement to update claimants at least every 20 business days.”  

See the ruling here.