It’s an experience Michael Grosberg calls “very curious” and given the recent news about travel insurance, very timely.
Last year, Grosberg bought travel insurance through Access America for a Labor Day trip to New Orleans.
You may recall that the Crescent City was evacuated that weekend, in preparation for hurricane Gustav. My trip was certainly interrupted when Continental airlines canceled all flights and rebooked me on a flight leaving a week later than scheduled. I had rented a car, drove to Houston, and was able to get home not much later than originally planned.
I submitted a claim to Access America for my car rental and other expenses. After a three-month delay, I was told that my claim was approved and a check will be mailed in short order. Imagine my surprise when, after a couple of weeks, I received a letter stating that my claim was denied because “evacuations” where not covered by my policy
Grosberg followed my advice for resolving this issue: He wrote a polite, strongly-worded letter to Access America and copied the California insurance commissioner.
“The check arrived just a few weeks later,” he told me.
Since my Troubleshooter column about Access America appeared last week, I’ve received numerous reports of delayed or denied claims — even with insurance companies that are completely legitimate.
What’s going on?
Well, it’s pretty simple. Insurance companies aren’t in the business of paying all claims. If they did, they’d go belly-up faster than AIG without a bailout.
They make money by denying claims.
Sometimes they take it too far. Sometimes you need to persuade them them to take another look at the denial.
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{ 3 comments… read them below or add one }
Hi Christopher,
Thanks for pointing out the importance of writing a polite, but firm letter.
Five of our companies consider being forced to evacuate by the authorities as a trip interruption which makes perfect sense since you have to leave early.
However, one company takes the stance that you won’t have a payable claim because “if you can be transported out, then the ‘complete cessation of services of Your Common Carrier’ for the required 24 hours didn’t occur”. I don’t think this is correct.
I don’t work with Access America, but I suspect this is what Access America was using as its original reason.
Steve Dasseos
Before I get to the tips that I’d use if I felt badly treated by a claims decision can I make a point for my industry: In my considerable experience insurance claims examiners aren’t Satan’s Spawn. There – I’ve said it…..
It’s true that they are there to minimise the loss paid by the insurance company but the individuals on the claims desk often get a kick out of helping a customer in trouble. In the travel insurance business they get to help people abroad who are sick and injured, sometimes in really bad situations, and a well handled claim is a source of great pride for the emergency teams.
The argument about insurance companies going out of business if they paid all claims is true but not for the seemingly obvious reason of greed. If an insurer does not conduct proper checks to weed out the things that were not supposed to be covered, the fraudulent claims and the claims that are over exaggerated (you know the story of that guy your friend knows who lost a Timex watch and claimed for a Rolex that he never owned) then the premiums that the insurer would have to charge would mean that most people could not afford to buy proper insurance.
The point about insurers making money by denying claims is not true. Customer service and the ease that people can make their complaints known these days mean that a bad faith insurer shows up in places like this website and the press faster than ever before and most insurance companies take complaints pretty seriously. Good insurance companies also often have clear divisions between the sales and the claims side of the business to ensure fair play. Customer satisfaction is good business – Brand damage because of poor customer service is a serious consideration for most industries these days and for an example of how bad faith can damage a business in 2009 ask around to see how many people put an AIG policy at the top of their insurance shopping list right now.
On to the tips;
• Just because a claims examiner says that a claim isn’t covered it doesn’t mean that it’s the end of the line for you. Write back and ask for a clear explanation of their reasoning – A second look by the insurer can often resolve misunderstandings and get a result for you.
• If you are still not happy look at the complaints section of the policy document. Insurers these days invariably have a sound complaints procedure. This procedure should give an independent review of your case. Here’s a typical clause;
If you disagree with our decision about a claim, you can request to go to arbitration through the American Arbitration Association. If we agree, you can submit a dispute to desk arbitration, as long as:
o you submit it at least 60 days, but no more than three years, after you’ve filed your entire claim with us, and
o it complies with the American Arbitration Association’s rules at the time you submit it.
both parties must mutually agree to such arbitration and appraisal. Any determination made is not binding on either party
• You’ll note that the arbitration in this clause is not binding although most insurers will be in a very awkward legal position if they do not accept. If you are still not happy the legal process is still open to you as well as making a noise in the media.
Chris,
In our experience, most claim denials and delays are the result of the customer not reading the policy and therefore not understanding what is covered and what is not covered. Additionally, many customers do not provide adequate documentation for their claims. Requiring proper documentation helps the insurer adjudicate the claim in a timely fashion and it’s critical to help control fraud (which helps keep premiums at reasonable levels).
In Mr. Grosberg’s situation (as described in your blog post, Evacuations may not be covered, but the policy allows for an about-face) he filed a claim for a situation that was not covered in his policy and he didn’t provide enough documentation. Upon his appeal, the claims examiner was able to gather additional information that revealed that the airport had shut down for 24 or more consecutive hours. This complete cessation of services by the travel supplier is a covered reason for trip cancellation or interruption and therefore resulted in Mr. Grosberg’s claim being paid.
Here are some tips to help your readers get their claims processed efficiently:
+ Read the insurance policy and understand what it covers and what it does not cover. Is your reason for cancelling the trip listed as a covered reason for trip cancellation in the policy?
+ Completely fill out the claim form and attach additional documentation.
If you don’t have proper documentation, try to obtain it on your own. Expecting the insurance company to do the research will slow down the process. Privacy laws may also prevent the insurance company from obtaining the information (such as medical records).
+ Try your best to send one packet of claim forms and documentation to lessen the risk of documents getting misplaced or separated.
+ Understand that the squeaky wheel principle won’t really get you anywhere. Insurance is highly regulated and providers must demonstrate that they adjudicate claims consistently. Your claim is either covered or not based on the policy or contract, not based on how many calls you make or how loudly you yell.
+ Be nice. Claims examiners are not evil people. They are doing their jobs and they actually do want to pay you for what you are legitimately entitled to receive.
+ Take advantage of arbitration services offered by the insurance company.
+ If all else fails, contact the Better Business Bureau or the Department of Insurance in your state.