Beware fine print as you travel

RICHARD MEADOWS
Last updated 12:11 12/09/2012
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UNAVOIDABLE: Overseas medical costs and emergency expenses can be sky-high, so you really can't afford not to be covered.

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As Homer Simpson once said, weaselling out of things is an important skill to learn: "It's what separates us from the animals - except the weasel."

Insurance companies seem to have been fast learners at the skill with travel insurance, in particular, littered with loopholes and exclusions designed to avoid paying out claims wherever possible.

But consumers can really blame their our own laziness and apathy. All the conditions are laid out in the fine print - it's just that not many people actually bother to read them.

When you do read a travel insurance policy document for the first time, it's something of a revelation.

Once you've worked through the massive list of fun things you're not insured to do, holidaying in a locked, padded room with a nice cup of tea starts to sound like your safest option.

The number of "general" exclusions in travel insurance policies from some major insurers can add up to more than 100.

One company devotes a page of small print to 74 'general' exclusions in its travel insurance policy. Trawling through another's document, we lost count somewhere around the 100 mark.

Exclusions aside, insurers have got you by the short and curlies. Overseas medical costs and the expense of emergency repatriation to New Zealand can be sky-high, so you really can't afford not to be covered.

But you can at least be informed about what to watch out for, because there's a lot of variation between policies.

Here are some of the most common reasons for travel insurance claims being rejected. The names are fake, but the situations are real:

Pre-existing conditions

Describing the state of your haemorrhoids to a stranger - in graphic detail - is not very pleasant. Withholding that sensitive information was Jordan's mistake. He booked a four-month holiday in November 2010, taking out travel insurance in early 2011.

But in June he was diagnosed with rectal cancer and was unable to travel. The insurance company rejected his claim to recover costs, because he had previously been treated for bleeding piles and suffered from haemorrhoids.

Those were symptoms of a pre- existing condition, it said, which was excluded under the policy. The Insurance and Savings Ombudsman (ISO) also rejected Jordan's complaint.

It makes no difference if you or even your doctor are unaware that you're seriously sick - all it takes is something that could be construed as a symptom.

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The wording of the clause is usually along the lines of excluding losses arising 'directly or indirectly' from pre-existing conditions.

That weasel word - indirectly - means the connection can be pretty tenuous. Some insurers will scrutinise your medical history, while others will look only at the last 12 months, so check the policy. Even if it costs you a bit more to get coverage for a specific condition, you need to lay it all bare to your insurer - warts, haemorrhoids and all.

Theft

Many an unwary traveller who's had valuables lost or stolen has run afoul of their insurer's strict exclusion policies.

Chris was asleep in his hotel room in Australia when somebody snuck in and stole several items, including cash. Because it wasn't on 'his person' when it was taken, the insurance company wouldn't cover it, so Chris complained to the ISO.

As the ISO case manager noted, the exclusion was onerous because it would require someone to carry cash on them 24 hours a day - even while swimming, showering or sleeping.

Nevertheless, Chris lost. Why? Because the onerous clause was right there in the policy document, and therefore had been "fairly brought to his attention".

Sam and Susanne's situation is another good illustration of how hard insurers will fight to avoid having to shell out.

The pair were staying at a London hostel when Susanne headed off to a job interview and Sam went downstairs to get some brekkie.

When Sam returned he found that someone had stolen stuff which had been hidden under the bed in the locked room they shared with two others.

The insurer rejected the couple's claim. Although the room could be entered only by a fee-paying guest with a keycard, it argued it was a 'public place' and was therefore exempt.

The insurer's laughable suggestion was that Sam should have packed all the possessions into a bag, and taken it to breakfast with him.

Thankfully the ISO told the insurer to cough up, proving it does pay to dispute any grey areas.

Boozing

Spending your holiday stone cold sober might be fun for puritans but it probably defeats the purpose for most of us.

Unfortunately, any mishaps relating to the influence of alcohol or drugs will most likely be excluded from cover - as Sergio found out.

After a night of clubbing and revelry in Bali, Sergio crashed on a bench atop someone's balcony.

As he tossed and turned in his sleep, he rolled off the balcony, fell four metres and broke his leg.

The insurer wouldn't cover the surgery costs because his behaviour was reckless. Someone who wasn't under the influence, it claimed, 'would not choose to sleep in this location'.

Perhaps they weren't able to prove his inebriation, because Sergio settled in the end for an undisclosed amount. Others may not be so lucky.

Loss of enjoyment

Insurance companies deal in cold, hard dollars - not whether you enjoyed the trip or not.

Imagine saving up nearly $4500 for a 10-day tour of Vietnam - only to spend the entire time in hospital with a burst cyst on the lung.

That's what happened to Julian. His insurer paid out for the medical costs, but used a 'loss of enjoyment' exclusion to reject a claim for the travel itself.

Julian never even made it to Vietnam - he was rushed to hospital at the stopover in Singapore. Nevertheless, he had technically used the flights and the ISO rejected his complaint.

Miscellaneous

We've only mentioned a handful of common exclusions so far. There's dozens more, and insurers have pretty much got all their bases covered.

What to do

So how do you avoid having your holiday ruined by a misadventure and a nasty surprise from the insurance company?

First, says Consumer NZ, you have to thoroughly read the policy document.

Don't just jump on the cheapest premium you can find, either. Like anything else, you get what you pay for.

Instead, tailor your travel insurance to the activities you plan to get up to, and consider paying extra to get cover for some of those pesky exclusions.

- BusinessDay.co.nz

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