Sometimes getting an insurance claim paid is like a game of chess

If you think travel agents are about as worthless as travel insurance — and I’ve seen your comments on this site, so I know you’re out there — then you’ll like this story.

Joanne Babbitt contacted me a few weeks ago because she was trying to handle an insurance claim for two clients who had been on a tour of the Galapagos Islands and Peru. It’s highly unusual for a travel agent to ask for my help, except for the occasional debit-memo dispute with an airline.

Then I reviewed the problem.

Her clients, Harry and Ann Chess, used her agency to plan a trip last winter.

Five days into their trip, their flight failed to show, and after many hours they were finally bussed to their next destination. This delay caused them to miss a full day of sightseeing, a dinner, and their accommodations, all of which had been pre-paid.

The delay also caused their next day to get off to a late start, causing them to miss a half day of pre-paid sightseeing and lunch.

After they returned Babbitt contacted the tour operator, seeking compensation for the lost days. But the company deferred to Access America, the Chesses travel insurance company.

Access America denied the claim as “interrupted travel”, stating a 24 hour minimum delay, but did pay the Chesses $300 ($150 per person) for travel delay. However, the Chesses pre-paid $1,738 ($869 per person) for a flight and services which they did not receive.

According to Access America, trip interruption coverage provides “reimbursement for non-refundable trip payments and deposits if a trip is interrupted for illness, death or other unforeseen circumstances.” Babbitt believes it should have applied to her client’s situation.

I like the fact that Babbitt wasn’t taking “no” for an answer and that she was advocating for her clients.

But was Access America out of line for denying the Chesses their interruption claim? I put the question directly to the company. Here’s its response:

We are very sorry to hear that the Chess’ had trouble with their trip to the Galapagos Islands and Peru. We understand how frustrating it can be when a missed connection negatively affects a dream trip like this one and we sympathize with the Chess’ situation.

I have checked with our Claims Department and they have told me they have already issued a check for $150 each to Mr. and Mrs. Chess which is the daily maximum travel delay benefit under their travel insurance policy.

After further review of the Chess’ situation, we have decided to provide them with an additional payment of $150 each to cover the second day when their trip was partially affected by their missed connection.

We’re glad that Access America travel insurance was able to provide this coverage for Mr. and Mrs. Chess and we look forward to serving them again in the future.

Unfortunately, trip interruption coverage doesn’t apply to this situation, but by applying the policy’s travel delay benefit to a second day, Babbitt and her clients were able to recover some of the lost money.

Could Access America have done more? Probably. But it could have also done much less. I’ve seen stronger claims than this denied outright by insurance companies.

Could Babbitt have been a better agent? No. I think she’s a reminder of why we still need good travel agents.

(Photo: br hefele/Flickr Creative Commons)

  • Richard Trilling

    They should move to France, or most probably any other country in the EU.

    They would have had no troubling collecting. French law says that the travel agent is 100% responsible. It’s then up to the agent to turn around and collect from whomever. I believe that most of the EU works this way.

    In the case cited, the travel agent seems to have done the best that could be done. Unfortunately US consumer law protects the airlines and the insurance companies, not the traveler.

    Despite what some people try and maintain here, traveling is NOT a privilege, but a necessity.

    Richard Trilling

  • Mike Z

    I can understand their trip was delayed and that is why they got the $150 payments, however the fact still remains that they paid for a flight which they never got. The airline should either have to pony up the refund, or the insurance company. Since when do you buy appropriate insurance, not get the product you paid for, and the insurance does nothing?

  • John Baker

    Since Access America in an underwritten insurance company, did the Chesss file an appeal with both Access America and their State’s insurance commission (goes by different names in every state)? This seems to be an insurance company looking for an excuse not to pay and that’s what the appeals processes are there to fix.

  • Chris in NC

    This is why I cringe when I see comments posted in other articles that say “the [OP] should have bought travel insurance.” In many of the cases that Chris (Elliott) writes about, some posters write repeatidly “OP should have bought insurance.”

    I’m not bashing insurance, but too many policies have exclusions that make them useful. Adding to the headache, the claim forms are often complex, and you are required to submit excessive documentation. Then there are the horror stories. Perhaps a competent travel agent will be able to provide a useful insurance policy, but I’m still skeptical.

    I am curious about hearing SUCCESS stories (where insurance saved the day). Do any of you have them?

  • SirWired

    Did the tour operator make the arrangement for the flight? If so, I think they should be the ones paying…

  • Thalassa

    @Richard Trilling: Despite what some people try and maintain here, traveling is NOT a privilege, but a necessity.

    I’d say a trip to Peru and the Galapagos is most definitely NOT a necessity. How can you possibly catagorize that sort of trip as not a privilege?

  • http://www.thetravelinggiraffe.com Crissy

    $300 for the interruption isn’t so bad. But a whole flight was cancelled. Sounds like the tour operator should be getting the the money back from the airline and refunding the passengers.

  • John Baker

    @Chris … Here you go: These are all from TravelGuard policies.

    Couple preparing for a non-refundable vacation. Daughter’s unborn son diagnosed with a terminal illness and won’t live much after birth. Couple’s entire vacation refunded.

    Gentlemen can’t make it to Scotland for a non-refundable golf trip due to the Iceland volcano. All expenses covered.

    Gentleman’s doctor advises that he not travel to Scotland for golf due to asthma issues shortly after the Iceland volcano. Entire trip covered.

    Two gentlemen delayed by weather and reach their tour a day late. All expenses covered for catching up to the tour.

    Entire group (4 couples) opts to cancel a custom prepaid tour after one of the members of the group is diagnosed with terminal cancer. Entire group refunded.

    Guy slips on a pool deck and dislocates his shoulder. Dr states no golf for 9 months (6 months before golf trip). Non-refundable deposit covered.

    This is a case of you get what you pay for. All of these policies were higher end policies from one of the more expensive travel insurance companies. If your car is covered by safe-auto, do you expect the same claims experience and coverage as someone who pays twice as much?

  • David Z

    I’d say a trip to Peru and the Galapagos is most definitely NOT a necessity. How can you possibly catagorize that sort of trip as not a privilege?

    Agreed. Food and water are definite necessities, but travel?

    Anyway, practically a lot if not everything else in life is like playing chess: you make moves, you take risks, you win some, you lose some, you keep playing.

  • Wrona

    @Chris in NC, I’ve made claims on travel insurance 3 times, each time they were paid in full. So far I’ve received more back in payment on claims than I’ve paid out for travel insurance. But I do read the policies before I buy to make sure they cover what I really need. There is no one size fits all travel policy and, like all other things in travel, some companies are better than others.

    I started purchasing travel insurance after an international trip where I hadn’t purchased it because I was young and healthy and thought I didn’t need it. Young and healthy doesn’t prevent you from having an accident (or from missing a flight, having baggage go missing, etc). After being out of pocket for medical expenses far greater than the travel insurance would’ve cost, I won’t repeat the mistake of not getting travel insurance.

  • Arizona Road Warrior

    It wasn’t disclosed in the article but was the travel insurance policy sold with the tour by the tour operator or did the Chesses purchase the policy directly from Access America? I know that Access America supply the travel insurance programs to AAA, Ski.com, Disney Cruise Line, Delta Air Lines and US Airways.

    Rule # 1 of buying travel insurance is to never purchase travel insurance from the travel provider (i.e. airline, cruise line, tour operator, etc.) because it is written to favor the travel provider not the traveler.

    Rule # 2 of buying travel insurance is to be weary of buying travel insurance from a travel agent. To sell an insurance product, a person needs to be licensed by the state insurance commission. If a travel agent is not licensed as an insurance agent, they could 1) sell the travel insurance ‘policy’ that comes with the tour, cruise, package, etc. (refer back to Rule # 1) or 2) point their customer to a source (i.e. InsuredMyTrip, Squaremouth, etc.) where they can purchase travel insurance.

    Rule # 3 of buying travel insurance is to read the policy once you received it so that you can review it during the ten day free look period in case if you need to cancel it. It is my recommendation to come up with a list of ‘what ifs’ (i.e. what if I become ill before the trip and couldn’t go? What if I become ill during the trip? What if my flight was cancelled due to weather? Due to a mechanical problem?) to determine what the policy will cover, what is excluded, etc. Another suggestion is have your homeowner and/or car insurance agent (if you deal with a real person not an online site) to read the policy. If you are going to do a lot of traveling or the cost of the trip is unusually high (i.e. $ 30,000), you might want to get a lawyer to review the policy.

    Who was the tour operator? Where was the tour operator when the plane didn’t show? Unless the Chesses were on a private tour (i.e. by themselves), it is my guess that this was a small tour (six to 16 travelers). Regardless if this was a private tour, a small tour or a large tour, the tour operator should have refunded the money for the airfare, meals, accommodations, etc. IF the tour operator booked these items.

    It seems to me that the tour operator booked these items given this statement, “After they returned Babbitt contacted the tour operator, seeking compensation for the lost days. But the company deferred to Access America, the Chesses travel insurance company.” Also, it seems to me that Access America put together a travel protection plan for this tour operator (refer to Rule # 1 of buying travel insurance).

    Did the Chesses contact Ms. Babbitt during the tour when this problem occurred? It seems like they didn’t. IMHO, it make sense to contact your travel agent (if you have one) when a problem occurred on your trip so that your travel agent can start working on it.

    To me, it seems like the ‘bad person’ in this situation is the tour operator. They took the Chesses money and walk away when there was a problem. If they had any integrity, they should have automatically refunded their money instead of blowing them the Chesses off and telling them to contact Access America where they (the tour operator) knew that the policy wasn’t going to cover them IF the policy was written for the tour operator.

    I have questions about the travel agent. How many years and how many tours has she sold for this tour operator? If she has been selling tours from this tour operator for several years, there would have been a good chance that there have been problems during a tour and a person will know how the tour operator responded.
    Personally, it is my opinion that the federal government should regulate travel insurance since it is interstate commerce. The first thing that they should do is to set up standard travel insurance policies like what the government did with Medicare supplement\Medigap policies back in the early 90s. Back in the late 80’s, there were several insurance companies selling hundreds of Medicare supplement policies and the consumer couldn’t compare apples with apples since every policy was different. The government passed regulations which resulted in 12 different standardized Medigap policies (Medigap Plans A through L). Now it is easy for a person to compare Plan K from company ABC to Plan K from company XZY.

    If there was standardization of travel insurance policies this will eliminate these travel providers that design their own plans which doesn’t cover a lot of things, written to favor the travel providers and etc. If there isn’t a standardization of travel insurance policies, it will be my choice for the federal government to ban travel providers from selling travel insurance policies.

  • Arizona Road Warrior

    @ John Baker – “This is a case of you get what you pay for. All of these policies were higher end policies from one of the more expensive travel insurance companies.”
    - – - – - – - – - – - -
    I totally agree with you. I will prefer a travel insurance policy from CSA, Global Alert, HTH Worldwide, MH Ross, Seven Corners, Travel Guard, Travel Insurance Services, Travel Insured, Travelex or TravelSafe over a ‘travel protection program’ that was sold by an airline, a cruise line, a tour operator, etc.

  • SirWired

    @Chris In NC: I’ve had two claims paid in the last year (TravelGuard). No significant problems. No denials, no lost paperwork, no requests for more paperwork.

  • TTNtraveler

    Also keep in mind many “travel protection” programs from travel providers don’t protect affected travelers in full. Some limit coverage to 75% or 90% of the purchase price.

    There are many good policies and many poor ones. A lot of travel agencies have a preferred policy for a number of reasons. Both for financial reasons and for service reasons.

    It sounds like the agent in this case was a good advocate for her client, but I have to wonder if the agent has an insurance company that she regularly uses for her vacations, or if she just relies on the provider to provide the protection.

  • Arizona Road Warrior

    @ TTNtraveler – “Also keep in mind many “travel protection” programs from travel providers don’t protect affected travelers in full. Some limit coverage to 75% or 90% of the purchase price.”
    - – - – - – - – - – -
    Another thing is that most of these ‘travel protection programs’ from the travel providers will give you a credit for a future cruise, tour, etc. instead of giving you money like you can receive from a third-party travel insurance policy such as Travel Guard. You might develop a medically condition that prevents you from traveling so who cares about a credit.

  • Steve

    @Chris

    I do not believe the true loss for the Chess’ was not accurately reported. You cannot count accommodation – they did stay somewhere even though it may not have been their desired next destination and they didn’t miss their next destination, they just got there by a different mode of transportation (bus, not plane). So their true loss was a dinner, lunch, a half-day and full day of sightseeing. To expect anything, let alone $869 is unconscionable in my opinion. If they have a beef with anyone, it should be with the tour operator. Access America was very generous to offer them $300 which probably covered their lost meals and sightseeing.

  • Mary

    Round and round and round we go! Trip insurance is always suggested but what does it cover?? So tired of being at the travel industries mercy, aren’t you? What a racket they have made for themselves and WE are the paying marks!

  • http://gottogovacationrentals.com Tom

    The Chess’ situation is an example of why you buy travel insurance, especially for a complicated trip like this one. But from what I can see it sounds like Chris has the right take on this situation. The insurance company seems to have stepped up and taken care of the insured.

  • Bill

    When trouble happens, nobody wins and it costs pretty much everybody money.
    I sympathize with their problem. There’s also the recent story of the person who had to pay $1200 to get back home from the Caribbean due to an airline strike.
    When these things happen, you just about never get reimbursed for all of your trouble. My mother was delayed 5 hours on a flight yesterday. It cost her time and money. It cost me time and inconvenience. It caused her to leave on a road trip later this morning than intended.

    But you know, the airline got my mother to her destination safely, and her bag made it. She wasn’t stranded on a tarmac. sometimes, you just have to cut your losses.

  • Mark K

    @Steve

    The article does not state they were accommodated anywhere due to them having to take the bus instead of flying. It is also not stated how long the bus trip was. Since they missed an entire day and half of the next day of their activities they may have spent the entire time on a bus reaching their next stop to continue the sight seeing. If this happened they should be allowed to request a refund for the night’s accommodation. For example, I can fly from Denver to Dallas in about 2 hours and spend most of the day doing whatever I want in Dallas and sleep in a real bed the same night. If I would take a bus instead, it is a full 24 hours on the bus (with numerous 10 – 15 minute stops along the way) where my “accommodation” would be the seat on the bus. Not exactly even a 1 star hotel.
    ~~~~~~~~~~
    Unfortunately there are too many missing details to determine exactly how they arrived at the amount they feel they were owed. I have taken many tours from tour operators and have never been supplied a detailed listing of how much I was paying for each individual activity. Even if I were to look into the cost of the plane and hotel and dinner, etc., the numbers I would get may have little or no relation to what the tour operator paid for those elements of the package. I do feel the tour operator should have refunded something to cover the missed sight seeing activities and the dinner, since it was not the fault of the customers that they missed those activities, instead of forcing them to file an insurance claim. After all, the tour operator probably didn’t have to pay for the missed activities.

    My most recent tour was interrupted for several of the group members by the volcano in Iceland. The tour operator offered the following options for those not able to get to the start of the tour due to the disruptions: a free change to any other tour offered for the rest of this year or a $75 credit per day per person for missed days if you joined the tour late. If you combined this with the “trip interruption” payments a good insurance policy provides, you would come out ahead on what you paid.

  • dennis kavanagh

    California and most states have laws that hold an insurance company in “bad faith” if they unreasonably deny a claim. In Calif. see Insurance Code sec. 790.03. In fighting a denied claim with the insurance company “scream & yell” “bad faith”. Also, Small Claims Court is the last resort. Insurance companies don’t like to be sued & have to appear in court. In Calif. up to $7500 in Small Claims and no attorneys may appear. Dennis Kavanagh-Retired Insurance Attorney.

  • Fred Munroe

    The tour operator who provided the original packaged trip, or their operator on the ground at the destination or intermediate point, fail to provide the agreed upon product/services.

    That operator and its sub-operator are the ones responsible for the failure of service. If this was my client (I am a travel agent) I would be advising them to file a legal action (small claims) against the tour operator and file a dispute with their credit card company, unless it is now too late.

    Access America covered 200% of its entire contacted exposure. They are not the bad guys here at all.