When Travel Insurance Goes Wrong

Many travelers understand the importance of buying travel insurance. They pay for the premium, receive the policy, and expect they will be covered if something happens which is not always the case.

One of the most popular stories on the Canadian Broadcasting Corporation (CBC) news site on Tuesday (February 28, 2023) was an article about travel insurance gone wrong. Louis Lamothe from Saskatchewan and his family are facing up to what is expected to be massive medical bills and the cost of a $56,000 flight home after his claim with Blue Cross was denied following the snowbird’s stroke in Arizona.

“He has forgotten how to talk, how to swallow,” Rebecca Fee told the CBC, talking about her grandfather who she said has been like her father. Fee said her grandparents (Louis and Arlene Lamothe) are avid snowbirds and spend half the year in Yuma, Arizona. On February 3 around 6 a.m., Arlene found Louis on the floor. He had suffered a stroke and was paralyzed on the left side. Louis was airlifted to Banner-University Medical Center in Phoenix.

Historic Downtown Yuma © Rex Vogel, all rights reserved

The next day, Fee drove for 30 hours from Estevan, Saskatchewan, to be with her 80-year-old grandmother.

“He was immediately intubated. He had a lot of heart problems after this,” Fee said. “He was in ICU for two weeks and now his breathing tube has come out.”

With the medical bills piling up, they sold their belongings in Yuma including their RV trailer and shed there.

Blue Cross, Lamothe’s insurer, was unable to comment on the individual case, but Lamothe’s granddaughter told CBC that the claim had been denied because he had not informed the provider that the dosage of prescription cholesterol medication he had been taking had doubled three months before heading south.

Yuma Territorial Prison State Historic Site © Rex Vogel, all rights reserved

The family insisted the failure to disclose the dose change was not deliberate. Nevertheless, the mistake has proven costly for Lamothe who could face a bill into the hundreds of thousands of dollars.

Stories like this aren’t all that unusual—nor are they just a Canadian issue—and can provide a temporary reputational gut punch to the industry and whichever travel insurer happens to be under the microscope.

“My doctor should NEVER have to get permission for anything (other than from me or my care-givers directly) when dealing with emergency and life-altering situations,” said one commenter on the CBC article which had more than 2,000 comments on it at time of writing.

“Any insurer that prevents that is NOT interested in your well-being over their bottom line of profiteering.

Desert wildflowers at Yuma © Rex Vogel, all rights reserved

“Paying out IS NOT in their best interest and therefore they will fight it tooth and nail. Last thing I’d ever want to be dealing with during possible terminal-type issues.”

Another said: “Life doesn’t matter to insurance companies. They only exist for profit. We live in a sad world with backwards ethics and morals.”

I’ve wondered for some time how much highly publicized incidents like this do cost the industry in terms of premium income as well as non-customers in terms of cover dearth. Just how many consumers shy away from non-compulsory products thinking they’ll get squeezed at the point of claim? I don’t have an answer.

Yuma hiking trails © Rex Vogel, all rights reserved

Other CBC commenters did side with the insurer and made the case that it was Lamothe’s responsibility to update his information.

“While this may sound like a small change in medicine when your doctor doubles your dosage, that means something. He should certainly have immediately reported the change to Blue Cross,” said one.

Another said: “We spend the winters in California and there is no fine print, it clearly states or asks if there were any changes to your health in the last 12 months including change of drugs or amount of drugs and you better tell them even if the plan now costs more.”

You do have to consider the human cost in situations like this and you have to feel for Lamothe and his relatives and others who go through similar crises particularly when it may be down to an honest mistake. Even in cases where an insurer may have been deliberately misled, a policyholder may not be thinking about the longer-term consequences when trying to save a quick buck. Maybe they’re buying the policy for someone else’s peace of mind.

Martha’s Gardens date groove © Rex Vogel, all rights reserved

Not many people, let alone insurance company and broker staff, want to see a denied claim making front page news especially one that’s putting a family under strain amid an upsetting medical calamity. It’s also probably fair to say that you don’t typically hear about all the cases where travel insurance went right.

Unfortunately, though, its instances like this that brokers need to be paying attention to when advising clients—particularly ones who might be struggling to trust the industry and skirting away from non-compulsory products—on their cover requirements.

Colorado River at Yuma © Rex Vogel, all rights reserved

Without travel insurance, seniors and those with health issues who have additional cover needs, may be more at risk and find themselves in a costly and upsetting position. The situation can be the same when adequate cover is not in place, an error (deliberate or otherwise) has been made or circumstances change.

Let’s be honest, many personal insurance clients will not read their insurance policy fine print. Nor will insurance necessarily be the first thing on their mind when they experience an event that leads to, for example, a change in medication.

Colorado River State Historic Park in Yuma © Rex Vogel, all rights reserved

To keep more cases like this out of the news and more importantly from happening all together, communication and messaging is key—particularly amid a post-COVID-disruption travel boom.

When outlining the value of travel insurance, the industry needs to make it very clear that a change in circumstance can have a huge impact if it goes undisclosed. And I’m not suggesting Blue Cross or any agent involved necessarily failed on this.

Brokers can be on the front lines here and as horrible as cases like Lamothe’s are, they underscore the importance of quality advice and engagement. They also show the value of having the appropriate travel coverage in place.

Worth Pondering…

Q: What do hospital gowns and insurance policies have in common?

A: You’re never covered as much as you think you are.