Eye on Travel Insurance » Rejected claims

Purchasers of travel insurance are frequently disappointed (and/or irate) when a claim is denied, often swearing never to use that insurance company again and writing to ITN suggesting that its readers do the same.

In such cases, the policy holder usually receives a form letter from the insurance company stating, “We regret that we are unable to provide benefits under the coverage purchased for the following reasons.” The letter then will quote the applicable text from the policy, usually the paragraph(s) describing the “covered reasons” and/or the “exclusions” from coverage.

To some degree, the problem is perpetuated by travel insurance companies’ lack of, in my opinion, adequate public relations policies, in that they don’t give a more understandable explanation beyond the boilerplate insurance policy text. But the policy holder, himself, has a responsibility to have read and understood the clearly described terms and conditions of the policy, particularly before filing a claim.

What to do if your claim is rejected

In my 14 years of writing travel insurance articles for ITN and fielding readers’ complaints regarding rejected claims, only once did I find it appropriate to challenge an insurance company’s rejection of a reader’s claim.

If a travel insurance claim of yours is rejected, the calm approach is to contact the writer of the rejection letter and ask for a more detailed and understandable explanation as to the reason for the rejection. Ask him/her to compare the facts of the claim with the applicable paragraphs of the insurance policy.

Two things will happen: 1) he will (or should) explain their position in a clear-enough manner that you will know how the decision was made, so that at least you will understand their position, and, 2) if you still feel that their “fine print” should still allow the claim to be honored, the insurance company will usually respond to a request for a formal review of the issue. Their response after review will be final.

In the one case where I challenged the insurance company’s rejection of a claim, I presented concisely in writing, and with documentation, the facts as they related to their policy. I stated that I did not understand why the facts did not support the claim and asked them to please pay the claim or clearly justify their rejection. They changed their position and paid the claim. The policy purchaser could have done the same thing.

Three things to remember

There are three important things to remember about travel insurance:

1. Travel insurance companies write their policies with their financial interests at heart (as they should or else they couldn’t stay in business).

2. In addition to the fine print in the company’s brochure and the actual policy supplied to you, much more fine print is included in a Master Policy that they will refer to somewhere with an asterisk but that you won’t necessarily have ready access to.

3. Insurance companies are regulated by the states from which they do business, and, in my experience, they will do what their policies promise. If the insurance company has rejected a claim and a review, they are probably on solid ground and it will be a frustrating waste of time to appeal further to a state insurance board.

Policy holder’s responsibilities

It’s understandable that policies aren’t read from cover to cover before a trip. However the most important details are there in the policy in bold print.

Before you file a claim, read all of the fine print that seems to apply to your situation and claim in order to judge whether or not your claim appears to be a good one. It doesn’t hurt to file a claim if you are not sure of its validity.

Some examples of rejected claims

1. ITN subscribers Dan and Frances Blaylock of Bethesda, Maryland, had their trip to the South Pacific seriously disrupted by the December 2004 tsunami. They arrived in Singapore to be told of the tragedy.

Their travel plans had included flying to Phuket and then on to three other destinations. Their confirmed and paid-up vacation reservations were worthless because the resorts had been completely destroyed. With their plans now disrupted, they proceeded with the remaining portions of their independent itinerary.

They kept track of their additional, unexpected expenses and upon returning home filed a trip-interruption claim which ended up being rejected by Access America. The rejection letter stated the following reason for the rejection: “According to the terms of the policy, the policy covers for a cessation of services by the airline, the tour operator, or the cruise line for 24 hours or more due to natural disasters.”

The Blaylocks did not understand this rejection. They did not feel that they should have been expected to attempt to go on to Phuket and the other destinations, considering the degree of destruction that had been reported.

When I was finally able to get an explanation from Access America after nearly three weeks of trying (travel insurance companies are reluctant to discuss claims with third parties, but they will respond when pressed), the cause for the rejection boiled down to this: “In Mr. Blaylock’s case, he did not file a claim for a covered reason. . . . The airports were open (Editor’s emphasis) when Mr. Blaylock was scheduled to travel to the affected region.”

If the airline to Phuket had had a “cessation of services for 24 hours or more,” the claim would have been for “a covered reason.” The fact that accommodations were not available in Phuket was not “a covered reason.”

This was not a very easy-to-accept reading of the policy’s terms and conditions, but it was accurate. In my opinion, Access America could have made that detail clear enough for the Blaylocks to understand in their original claim-rejection letter.

2) Another couple, who prefers to be anonymous, wrote to ITN saying that they had paid $6,580 for a December ’04 QE2 cruise plus $508 for a travel insurance policy. They explained, “. . . our mom was 99 years old and we felt that would be the best choice for us.” (A good decision, in my opinion.)

On Nov. 1, ’04, they received a call and learned that their son required immediate hospitalization and emergency treatment for alcoholism and detoxification in what ultimately required a 44-day program.

In their letter to ITN, they said, “Grand Circle Travel provided us with a partial refund in a timely manner when we notified them of our need to cancel the trip. Trip Mate, however, twice rejected our claim, originally stating that claims are not paid for ‘mental, nervous or psychological disorders.’ And yet, at the hospital, we had been told over and over again that ‘alcoholism is a disability, a disease’.”

Again, it was with great effort that I finally received an explanation for the claim rejection: Trip Mate does not accept alcoholism as a “covered reason.”

I was told by a representative of Trip Mate that the claim was rejected because it fell under one or both of the policy’s clearly indicated paragraphs of exclusions: “b) mental, nervous or psychological disorders” and “c) being under the influence of drugs or intoxicants unless prescribed by a physician.”

As in the other subscribers’ case above, this was not an easy-to-accept reading of the policy’s fine print, but it was correct. My scanning of travel insurance policies on the Internet indicated that a common trip-cancellation exclusion is any claim received as a result or consequence of being intoxicated or under the influence of any controlled substance unless it was administered on the advice of a legally qualified physician.

My advice is that if you are aware of a specific potential problem of any kind that might cause a cancellation, look for the applicable details in the exclusions/covered reasons sections of several policies before making your purchase.

An insurance broker such as Dan Drennen of World Travel Center (call 800/786-5566, ext. 3621, or 402/343-3621) could be of great assistance in finding a policy that covers an unusual travel insurance need.

CORRECTION — Note that an incorrect toll-free number was printed for World Travel Center in my article “Eye on Travel Insurance” in the November 2005 issue.

Long-term travel insurance

Speaking of World Travel Center, they have announced a new travel insurance plan, Travel Protect International, that provides annual, multitrip coverage of trip-cancellation and trip-interruption losses if a person has to cancel due to illness or injury. The policy pays up to a maximum of $4,500 in addition to the usual coverages such as hospitalization, emergency medical evacuation, etc.

This plan isn’t for everyone, but it does provide, for the first time, and at a reasonable cost, a decent maximum amount of cancellation coverage for those who travel overseas frequently.

Under the plan, the maximum individual trip length is 42 days, with an unlimited number of trips per year. The maximum age for a policy holder is 75 (for those over age 65, there is an increased premium and there are no death benefits).

Coverage for preexisting conditions (any disability or medical condition which you have suffered or have been diagnosed with up to 12 months before arranging coverage) is excluded. There is a deductible in the amount of $50.

Also available is coverage for a single trip up to a maximum of 90 days.

The Travel Protect International annual multitrip standard policy costs $225.68 for an individual or $338.52 for a couple. An upgraded policy with personal accident coverage costs $241.48 for an individual or $362.22 for a couple. A family plan is available. Premiums are doubled for those age 66 and older and travelers turning 66 on a trip.

Happy trails!

—Eye on Travel Insurance is written by Contributing Editor Wayne Wirtanen.