When Jason Griffiths spent thousands of dollars on his American Express credit card to buy tickets for his upcoming cruise to New Zealand, he thought he was covered with complimentary travel insurance for his entire trip.

But more than 18 months after the 33-year-old was fatally injured in an explosion on Whakaari or White Island, the insurance company behind the credit card has now rejected a loss of life claim by his grief-stricken family, based on a technicality.

Mr Griffiths, who lived on the NSW Mid-North Coast, had been on a cruise with eight friends, including Karla Mathews and Rick Elzer who also died from the explosion on December 9, 2019.

Chubb Insurance, which underwrites insurance for American Express, recently wrote to lawyers representing Mr Griffiths's family rejecting the claim because he was "touring" the island and not being transported to or from the cruise ship.

His mother Karen Griffiths said it felt "like a kick in the guts", prompting her to speak out to warn other holiday-makers about the pitfalls of complimentary credit card insurance.

"It's just so wrong on so many levels," she said.

"He had the American Express [card] because of the complimentary insurance, which is attached to it.

"He's used it a couple of times on the holidays he's been on.

"For anyone else out there that has American Express, I'd be thinking twice, I really would.

"All they're caring about is people who use their card and get all their money off them in interest and everything else that goes along with it."

Loss did not arise from 'transport'

After previously asking for details about Mr Griffiths's location when he was fatally injured, a Chubb Insurance representative wrote to the family's lawyers earlier this month and rejected the claim.

The representative said the policy only covered time spent on the cruise ship, transport to and from the ship and while waiting in a terminal, but not while "touring" during stop-overs.

"Chubb previously expressed a view that Mr Griffiths was touring on, or otherwise visiting White Island when he was fatally injured," the letter stated.

"It seems Mr Griffiths was walking away from the crater when he was fatally injured.

"Unfortunately, either way, there is no loss arising from 'transport' to or from a Common Carrier Conveyance for which the relevant cover is engaged.

"Mr Griffiths was not utilising a vehicle or other system or means of transport. 

"In either scenario, leaving aside whether Mr Griffiths was returning to a Common Carrier Conveyance, he was not utilising 'transport'…"

Ms Griffiths said the decision has only added to her family's trauma.

"They wanted to know if Jason was on his way back to the ship when it all happened and we got evidence that he was walking back from the crater to the boat that was to take them back to the ship and we thought that was enough for Chubb because that's what they wanted," she said.

"Then they came back and said 'no, he had to be on the boat going back to the ship'.

"What's the difference, he was still on his way back?"

"Had he been on that boat, we wouldn't be in this predicament now, he would have been alive today."

Lawyer urges insurer to act in 'good faith'

Principal lawyer at Maurice Blackburn Josh Mennen said the insurance company's interpretation of the claim was "appalling".

"Insurance companies write these contracts and in this case they've written it in a way which gives them a labyrinth of complex ways to decline the claim," he said.

"I think Chubb really needs to reflect on the royal commission [into financial services] which dealt with these types of insurance products and the way in which these insurers treat these types of claims.

"Chubb should really think about not what it can get away with if it relies upon the fine print in an insurance contract but what the community really expects of an insurer in its shoes and what its duties are, having regard to its obligation to act in the utmost good faith."

Mr Mennen said most consumers would assume when they purchase a travel insurance policy they're going to be covered from the time that they set off on their journey to the time they return home.

"Unfortunately, with this product and lots of add-on travel insurance products, that's simply not the case."

"Here we've seen this play out in really tragic circumstances."

Maurice Blackburn has offered to represent the family to appeal the decision.

After being contacted by ABC News, an American Express spokeswoman said while the policy did not cover deaths of that nature, it would reach out to the family to offer some "financial support" but declined to elaborate on the details.

"We offer our deepest condolences to the Griffiths family," she said.

"Mr Griffiths' estate made a claim under a transport accident benefit in the policy.

"Unfortunately, Mr Griffiths' death was not caused by a transport accident but rather a volcanic eruption, and therefore his death was not covered by this benefit.

"Given the extraordinary circumstances involved, American Express and Chubb are in the process of reaching out to the family to provide financial support.

"We are also exploring if there are other expenses which we can assist with, given that Mr Griffiths was eligible for a range of emergency medical and related expenses."