Owen Park
The author of this article has personally made 3 claims over the past 10 years and his friends have made 6 claims over the same time frame. The author of this article has documentation to detail each of the 9 claims made by himself and his friends – details on whether the insurer(s) paid out or not, why they may have fought the claim or not and how long the claims process took for each claim in the end. This article outlines the positives and negatives in detail. This article is not to promote one particular insurer over another but it will enable you to read between the lines of what the insurance companies market materials say and provide you with the critical details that you must understand before purchasing travel insurance and the crucial habit that you must instill prior to departure that will assist enable your claim to be processed as smoothly and as quickly as possible in the event you are required to make a claim.
This article outlines patterns that have emerged from nine travel insurance claims. The article does not recommend one insurance company over another. Rather, it highlights aspects that travelers should be aware of prior to purchasing insurance, and how to increase the chances of having a smooth claim process should the worst happen and a claim is required.
The claims that paid fast
Three of the claims paid out within 30 days with minimal correspondence between the claimant and the insurer.
Events which are unambiguous (i.e. hospitalisations, flight cancellations advised by airlines and thefts reported to police within 24 hours) and documented (i.e. doctor’s notes and hospital bills, flight cancellation advice from airlines, police reports, receipts for lost property and original tickets). The claim amount was modest, under 500 dollars. Documents should be collected before leaving the country. In this case: receipts, police reports, doctor’s notes, original tickets, etc. The more information that is readily available, the more efficient the insurance company’s processing will be.
Insurance companies pay out small, well-documented and clearly-covered claims efficiently. They would lose more money by escalating such a claim than by paying out the claim in full. If you have a claim that falls into this category, stay flexible and process the claim as efficiently and quickly as possible.
The claims that fought
Of the nine total claims, 4 of them took between 60-120 days to be paid out and required several rounds of back and forth (or appeals). Again, the key takeaways here are summarized below.
I learned from a local friend who’s gone through his fair share of insurance claims what the best option actually is – which is not something you read in articles.
Four of the nine claims reviewed took sixty to one hundred and twenty days to resolve, with multiple appeals required. The pattern for these claims included ambiguity with regard to timing or cause of loss (a flight delayed due to weather that subsequently became mechanically induced while in progress, a medical expense with a pre-existing condition, a lost bag that the airline was also partially responsible for compensating). Most of these problematic insurance claims had a high claim amount, between $1,000 and $5,000. On 4 claims it took 60 to 120 days to collect (with multiple appeals in between), this was mostly due to the lack of one document required by the insurance company to process the claim.
Four others eventually paid but required much more time, from 60 to 120 days. In each of those instances, the claimant had to write and/or call multiple times before finally arriving at a payout. The last of these actually required a letter from a state insurance regulator for the insurer to pay.
The claims that didn’t pay
Two claims were denied outright. Both involved:
Two other claims were ultimately rejected by the insurer because they involved activities that were excluded from coverage under the terms of the policy. These were off-piste skiing and a scuba dive that involved descending to a depth below that which is allowed for recreational divers. Both denials were the result of a policy provision not read by the consumer prior to purchasing the policy (although it was ‘buried’ in the wordy policy documents and clearly stated). The claimant had not read the activity exclusions prior to the trip.
These denials were upheld on appeal. The insurer was within their rights. The lesson was about reading the policy, not about insurer behavior.
Documentation habits that work
By making a habit of the following practices across all nine of his claims, the traveler was able to provide necessary documentation to help them be paid:
Take photos of receipts the day you receive them. Your phone is so much better at keeping track of receipts than a piece of paper. For each travel day send an e-mail to yourself with copies of all receipts for that day. If your phone gets lost you can at least still refer to your e-mails. Summary of Medical Treatment from Doctor/Hospital: Even if your doctor/s speak no English, get them to write a summary of your treatment in English as soon as possible, so that you don’t have a documentation gap later on. For claims of theft, make sure to file a police report within 24 hours as most insurance providers require a police report for a claim of theft to be accepted and some even require the police report to be filed in person and not over the phone. For flight delays or cancellations take a screenshot of the airline’s notification to you of the delay or cancellation as well as a screenshot of the departure board at the airport showing the time of the delayed or cancelled flight. This is further evidence in establishing liability for the delay. As time passes airlines will often ‘lose’ evidence of delay which had been initially notified to and accepted by the passenger. Retain original documents such as airline tickets, boarding passes and accommodation receipts as you will often be requested to provide these originals to the insurer.
Policy features worth checking before you buy
Understand the details about your policy’s coverage before you buy. The headline price of your policy may not reveal all of the costs associated with your coverage.
I learned this trick from a Hostel Owner in Porto and this was the cheapest tip I ever got the whole trip long.
Maximum medical coverage: As a general rule, look for policies with at least $100,000 in maximum medical coverage. While $25,000 is sufficient for minor medical issues, serious injury or illness could easily exceed this amount, leaving you to foot the remaining bill. Medical evacuation coverage: $250,000 or more. Even if you have good health coverage, an air ambulance can cost $100,000 to evacuate from a remote location. Pre-existing condition rules: some insurance policies cover pre-existing medical conditions if you purchase your policy within 15 days of your initial trip deposit payment – check the terms carefully to see if your policy is one of them. Activity exclusions: Most insurance policies clearly list activities that are considered to be high risk such as climbing above 4,500 meters, diving below 30 meters in depth, riding motorcycles on foreign roads without a valid local license to operate said vehicles, and skiing down unmarked and untracked off-piste slopes. The reasons you can cancel a trip for which you receive full or partial reimbursement under the policy. “Cancel for any reason” policies are very expensive, but at least you know exactly what you are getting. Time frame in which to file a claim: 30 days up to 90 days depending on the insurance company.
The honest summary
Travel insurance is a very complicated product that does very well in cases where it was designed to help and does very poorly in cases where it was not. In other words, travel insurance does a great job covering emergency medical treatment and evacuation as well as lost luggage and canceled flights for covered reasons, as well as trip interruptions for covered reasons. But, it does very poorly when an event has ambiguous causes, the traveler was participating in an excluded activity, the traveler failed to properly document a loss, or the claim was filed late.
When you have a credit card with built-in travel insurance, always read the terms of that insurance very carefully. The coverage is surprisingly good for trips that have been paid for with the credit card. The limits are lower than for a normal travel insurance policy, and there are probably more activities excluded from coverage.
Specialty travel insurance for activities such as climbing, advanced diving, high-altitude trekking, can be expensive, but the risk of not having proper insurance for these types of activities far outweighs the extra cost. Look for companies that explicitly cover your high-risk activities.
In general, the mid-range detailed policies that provide 100,000 dollars of medical coverage, 250,000 dollars of medical evacuation coverage, and decent trip cancellation coverage for a price of around 4-7% of the total trip cost are the most suitable for the vast majority of travelers on most types of trips. However, even with such a good policy, there is always a lot of work required to substantiate claims and one can save weeks of back-and-forth by adopting the documentation habits laid out above.
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