A 21-year-old Melbourne woman is challenging insurance giant QBE over its blanket exclusion of mental illness in its travel insurance policy, in what could be a watershed legal case for the industry.

Ella Ingram, who developed depression when she was 17, was refused reimbursement for a 2012 school trip to New York, after she became too mentally ill to travel.

QBE’s travel insurance does not cover trip cancellation due to mental illness, even if the mental illness is not a pre-existing condition.

QBE declined to comment to 7.30, and attempted to delay reports on the matter by pursuing an injunction, which was denied late on Monday .