trip cancellation – OLHI – Free, impartial help with your life & health insurance complaints

An Ontario couple planned a trip to Peru for 20 days, with a departure date of April 18th, 2010. The trip included air fare and a package tour throughout the country. Total cost exceeded $9,000 for two persons and was pre-paid.

At the time of booking, they purchased insurance coverage for the following risks: trip cancellation & interruption, emergency medical, baggage & personal effects, flight accident and travel accident. The contract covered re-imbursement for “the unused portion of pre-paid travel arrangements.”

They departed on April 18th as planned. Unfortunately, the husband immediately fell ill upon his arrival in Lima, Peru and was hospitalized on April 19th. He was diagnosed with a heart problem and remained in hospital for 9 days until his condition was stabilized and he was able to return home to Canada with his wife. Unfortunately, as a result of his hospitalization, the couple was unable to participate in the country wide tour they had previously booked since it departed from Lima on April 20th.

While her husband was in hospital, the wife was required to obtain hotel accommodation in Lima. Naturally, they also incurred a variety of medical and related expenses associated with the husband’s hospital stay.

Shortly after their return to Ontario, the couple submitted a claim under their travel policy. The insurer denied a large portion of their expenses and issued a letter stating that the loss was not fully covered under the insurance policy. In its letter, the insurer quoted the following policy provision: “What is not covered? … 2. This insurance does not cover any loss, claim or expense of any kind caused directly or indirectly from: c) pre-paid travel arrangements for which an insurance premium was not paid”. The insurer further stated that the couple’s insurance policy limited them to a maximum reimbursement of $400 per person for pre-paid travel arrangements.

Upon receipt of the insurer’s letter, the husband contacted the insurer through its call centre asking why he did not have coverage for the total cost of the pre-paid travel expenses. The representative could not satisfy his enquiry and after several unsuccessful calls to the insurer, the consumer called OLHI.

In accordance with OLHI’s process, his call was promptly routed to a Dispute Resolution Officer (DRO) for assistance. She discussed the facts giving rise to the claim with him, as well as the insurer’s position as described in its letter. From their conversation, she concluded that the “What is not covered” section of the contract quoted by the insurer in its letter did not apply in these circumstances because the consumers had purchased a travel policy that covered all risks, including the “unused portion of pre-paid travel arrangements”.

Our DRO advised him to respond to the insurer’s letter in writing, including the documentation requested by the insurer and references to the terms of his policy applicable to his claim.

Based on our DRO’s advice, the husband sent a letter to his insurer on July 28th. A few weeks later, she received a call from the husband thanking her for her assistance and confirming that he had received a reimbursement of more than $9,000 from the insurer.

As they talked further, it appeared that an administrative error had been the cause of the earlier denials by the insurer. Once the consumer wrote back, quoting the nature and the types of coverages he had contracted for as recommended by our DRO, the error was quickly identified and the claim was promptly paid by the insurer.

Disclaimer: Names, places and facts have been modified in order to protect the privacy of the parties involved. This case study is for illustration purposes only. Each complaint OLHI reviews contains different facts and contract wording may vary. As a result, the application of the principles expressed here may lead to different results in different cases.

Mr. A. contacted OLHI when he was denied reimbursement for a cancelled trip to the Caribbean. By the time he called, his request for payment had been turned down three times with the identical “form letter” and he was, understandably, frustrated. His frustration was exacerbated by the fact that his traveling companion had been reimbursed the cost of her cancelled trip many months before.

The OLHI Dispute Resolution Officer (DRO) who spoke to Mr. A. learned that in late September, he had booked a trip to the Caribbean for himself and his common-law wife, with a departure date in December. He paid for his trip on his credit card. One of the benefits afforded to holders of the credit card was automatic “trip cancellation insurance” that permitted card holders to be reimbursed if a trip paid for through the credit card was cancelled in certain circumstances. The specific clause permitted full reimbursement of the cost of the trip in the event of “the unexpected death, sickness, injury or quarantine of you, your immediate family member, your travel companion or your travel companion’s immediate family member. Sickness and injury must require the care and attendance of a physician and the physician recommends interruption of the trip.”

Unbeknownst to both Mr. A. and his common-law wife, her daughter had seen a physician in early September, before their trip was booked, with a general complaint of abdominal pain. The daughter was in her mid-20s, self supporting, and did not live with her mother and Mr. A. In fact, they had no idea that she had even visited the doctor until two months thereafter when test results arrived and the daughter advised them that her doctor recommended surgery to remove a cancerous growth. As is typical, the daughter was put on a waiting list for surgery “as soon as possible,” with no specific date. The daughter’s operation was eventually scheduled for a few days after Mr. A. and his wife were booked to fly to the Caribbean and hence they decided to cancel their trip.

Before cancelling the trip, Mr. A. called the claims administrator and obtained the forms required to submit a claim for reimbursement of his cancelled vacation. A file was opened and he promptly filled out and submitted both his form and the form required to be completed by the attending physician.

Approximately six weeks later, he received a response from the administrator of the claim denying his reimbursement application on the basis that “the cancellation of your trip is not covered by the terms of your insurance policy”.

Although he called the claims administrator several more times asking for an explanation why the claim was not covered, the company’s response was to issue two further letters with the same explanation. Eventually, he was told in a phone call that his claim was denied because his wife’s daughter had sought medical attention before he and his wife booked their trip.

Mr. A. did not understand this explanation because neither he nor his wife had any knowledge that the adult daughter had been to the doctor until her diagnosis was confirmed, several months after they booked their vacation. His lack of understanding was further compounded by the fact that his common-law wife, who had submitted a trip cancellation claim through her own insurance company, was reimbursed the cost of her trip within a month of submitting her claim.

Eventually, Mr. A. contacted OLHI. Our DRO recommended that he write to the manager of his insurer’s claim department, rather than continue calling the claims administrator. He wrote this letter but called OLHI back two months later when he had not received a response. At this point, our DRO wrote directly to the insurer’s Ombudsman, asking that Mr. A. be provided with a response to his letter. Within two days, the Ombudsman’s office replied to Mr. A. with a copy to OLHI.

It was finally explained to Mr. A. that his insurer was not willing to pay the claim because it did not consider the daughter’s condition to qualify as a “sickness” under the policy because it was not a “sudden illness or disease” since she had symptoms that caused her to see her physician before the trip was booked. This is a common interpretation by insurers, who take the view that any medical condition that is diagnosed after a trip is booked, but which is the subject of a doctors visit beforehand, is a pre-existing condition not covered under the travel insurance policy.

However, the good news for Mr. A. was that his credit card company agreed to reimburse him the full cost of his trip in any event, in view of the circumstances and the fact that he was a long standing and good customer.

Tag: trip cancellation

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