Check Your Trip Cancellation Policy. It’s Not Always What You Expect

Recently I was contacted by Ellen Roseman, financial columnist for the Toronto Star, for some advice to help one of her readers who felt her trip cancellation policy, issued by RBC, had let her down. (See Ellen’s blog.)

Sheila Gerlock of Thornhill, Ontario, complained that on a Caribbean cruise last year a fellow passenger became seriously ill and the Carnival cruise ship diverted to a nearby port to offload the passenger at a hospital. As a result, the ship docked late, Ms. Gerlock and her family missed their air connection to Toronto, and they had to make other arrangements, which cost them around $2,500. Meanwhile, RBC denied their trip interruption claim on the grounds that a diversion caused by another passenger becoming ill simply was not listed as a covered benefit. And it wasn’t listed as an exclusion either. Well, in the end Carnival kicked in about $800 for the inconvenience caused, but Ms. Gerlock thought RBC should be responsible since she bought coverage for unexpected interruption or cancellation.

But according to the fine print in the RBC Insurance Company Deluxe travel insurance policy, diversion of the cruise to attend to the medical needs of another passenger was not among the listed covered risks. No matter that the diversion was unexpected or beyond the control of the insured clients. It was a risk the insurer did not accept and the Gerlocks were, in effect, paying a share of sending a fellow passenger to the hospital.

Ironically, if the stricken passenger had been one of Ms. Gerlock’s own family or travelling companions, or if her trip had been interrupted by any number of other unexpected, but specifically listed causes, Sheila would have been covered. But trip diversion to attend to a fellow passenger was not a listed covered risk so she was not covered according to the terms of the policy. Well, how do you list every potential covered risk? So here we see hair splitting at work.

Fortunately Sheila didn’t give up. She appealed to RBC—three times—each time earning a denial of her claim. The RBC appointed ombudsman ultimately stated the bottom line: “the medical emergency of another passenger is not a covered risk.”

That’s when Ms. Gerlock contacted Ellen at the Star, and Ellen contacted me for my thoughts. Though I felt the denials were technically sustainable on the basis of the wording in the RBC policy, I did not think they were reasonable on the basis of what the customer had a right to expect from a trip cancellation/interruption policy. Her cruise was interrupted by a cause over which she had no control and which she could not anticipate. It was not a matter of her not reading the policy ahead of time to determine her own eligibility. She was not denied because of any pre-existing condition, or non-disclosure, or anything she could reasonably have been expected to do in applying for insurance. This was not a war zone. This was not an act of terrorism. In short, the denials were unreasonable and lacked common sense.

Sheila and her family did what they were supposed to do. They bought insurance from a company that designs policies for Canadians going abroad because they had heard (quite correctly) that trip insurance bought from most cruise lines serving North American clients is skimpy, inadequate, and not up to the standard of trip insurance designed in Canada for Canadian clients travelling out of the country.

But don’t despair. The story has a happy ending. After I made a further inquiry, RBC admitted that after another review, such a denial was not warranted, that several other clients had made similar claims, and within days they reimbursed the Gerlocks just over $1,500 to make up the difference paid to them by Carnival. Not only that, within two weeks RBC sent me a press release noting that from now on their trip cancellation/interruption policy would specifically cover diversions caused by a fellow passenger’s illness, and that they were also increasing their payout for passengers forced to miss shipboard events or shore excursions due to their illness or the illness of a traveling companion. I don’t know if any other company has that specific benefit listed in their policy, but maybe they will after this. Anyway, check it out if you’re planning a cruise soon.

Look closely at the benefits offered by your travel insurer, and look at the exclusions to make sure you know what is and what is not covered. And above all, if you think your claim has been unfairly denied, don’t take it lying down.

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