Robert Woodcock, a 72-year-old Toronto resident who tries to fit in trips to Florida around his hockey goalie duties, has never made a travel insurance claim. But he is worried his luck could run out and, worse still, that his claim could be denied.
Sonja Hanley of Oshawa, Ontario, has had one out-of-country medical claim paid and one denied. She had two medical emergencies in Florida in 2011, her twelfth winter in The Sunshine State. Each time she was rushed to a hospital with unexpected symptoms.
Months, and several upsetting telephone calls later, the travel insurer for the final 60 days of her trip refused to pay a $6,000 bill. Instead, it refunded her premium.
“They were always nasty,” Sonja says, referring to employees from a claims adjustment firm associated with the sales agency. “They would twist my words, accuse me of fraud and lying, and call back a few weeks later.”
But Sonja, whose retiree benefits include a month of travel health insurance, did not give up. She turned to one of her three sons, a lawyer at the prominent Toronto firm Torkin Manes Barristers and Solicitors.
Corporate lawyer Michael Hanley worked with colleagues familiar with insurance and medical malpractice law to draft a letter. That letter did more than threaten to sue in court.
Michael says they provided detailed evidence that showed his mother had answered all medical questions accurately, and that the three reasons given for denying her claim were simply not true.
End result: The insurer paid the claim within two weeks.
“The insurer was wrong on the facts, the plain facts,” Michael insists. “My mother was very conversant with the facts of her medical situation,” he added.
The insurer was not dealing directly with his mother regarding the claim. But after the lawyers’ letter arrived, they paid the claim without arguing, without conceding an error, and without explaining.
Michael acknowledged that a lawyer’s time is generally too valuable to involve in a $6,000 claim dispute, and that trials in court could cost each side tens of thousands of dollars.
Less costly options than hiring a lawyer
But there are less costly options for consumers like Robert Woodcock, the central character in this series, if he ever were to have a claim denied. He would have to present evidence he qualified for the policy, answer the medical questionnaire truthfully and, once the policy was in force, avoid breaching any policy exclusions. That requires diligence and careful reading.
The first place to turn would be marketer of the insurance, then the insurance company that underwrites the policy. Insurers licensed in Canada have their own internal dispute-resolution process that consumers may use.
If appealing to the insurer fails, or if there is no reply to a complaint within 90 days, a consumer may turn to the OmbudService for Life and Health Insurance (OLHI). It’s difficult to gauge how much success the consumer will have, however. Limited information is available, and this service has not dealt with a large number of cases.
During 2011-2012, the OmbudService reports it received 237 complaints involving travel insurance. The annual report contains information (see page 9) that reveals that only two of the travel insurance complaints were investigated, among 13 complaints involving various types of insurance.
The outcome was not revealed in an annual review on the OmbudService website. Insurers did accept the recommendations of senior adjudicative officers in five cases, but it’s not clear whether any of those cases involved travel insurance.
Before approaching the OLHI for help, consumers should be aware that they may turn to the courts later if they do not like the results of a review, or if an insurer has refused to accept it. They will have as much time to sue after the process has finished as before, except in Quebec (see item 7).
But neither side of the dispute will be able to call on information or OmbudService representatives in court, and they must agree never to reveal information to the press.
Another option when a travel insurer or representative denies a claim is to sue in small claims court. You may represent yourself in court, or hire a lawyer or law student.
The dollar limit you may recover will vary among provinces and territories, from as little as $7,000 in Quebec to $25,000 in Ontario, British Columbia, Alberta, Nova Scotia, and Newfoundland & Labrador. Extra compensation may be awarded to pay court fees, and interest on the amount of the award before and after the trial.
Consumer success rates in the courts
Hilda Zannis of Westmount, Quebec, lost her suit against RBC Insurance before she went to small claims court in 2008. The judge could see from a doctor’s medical notes that she was on medication for a heart disease when she travelled, but she had not revealed that information on her medical questionnaire. So she lost.
But cancer-survivor Laureen Strikaitis did persuade a small claims court judge in British Columbia that her claim under RBC Travel Insurance trip cancellation coverage was denied improperly in 2003.
RBC was only successful in appealing the judge’s $750 award for punitive damages, a penalty for denying her claim in the first place. A judge of the Superior Court of British Columbia did not contradict the small claims court judge who found that Strikaitis had answered the medical questions accurately.
Consumers have had mixed results from suing in higher courts, either immediately or on appeal. In a sample of seven cases involving travel medical insurance since the 1990s, consumers won in three, and lost in four, usually after a long wait.