How to navigate the risky world of travel insurance

Taking a vacation always carries a certain risk, but some travellers find that buying health insurance is no safety net in the case of an emergency.

Just ask Jennifer Huculak-Kimmel, the Saskatchewan woman who incurred a bill for $950,000 after giving birth prematurely while vacationing in Hawaii in 2013.

Huculak-Kimmel said her insurance company wouldn't cover the massive bill due to a pre-existing condition — namely, a bladder infection she had four months into the pregnancy.

Many insurance claims are denied on the basis of pre-existing conditions. Here's a closer look at this often confusing issue.

What is the definition of a 'pre-existing condition'?

A pre-existing condition is a health condition, including pregnancy, that "you know about before you buy the insurance," says Will McAleer, vice-president of the Travel Health Insurance Association of Canada.

When you agree to buy travel insurance, either directly from an insurer or through a broker or travel agent, you are asked to fill out a questionnaire. It will ask you if you have a history of a variety of medical conditions, from cholesterol to high blood pressure to a previous bout of cancer.

The questionnaire is meant to help the insurance company assess its risk when quoting you a price, says McAleer, who likens it to knowing the history of a house when buying home insurance.

If you honestly don't know about a pre-existing condition, you can't be denied an insurance claim after a medical emergency abroad, says George Frank, a partner at the Toronto law firm Devry Smith Frank LLP.

Does a pre-existing condition mean you can't get insurance?

Not necessarily, but it does mean that you have to demonstrate that there has been a "stability period" — which could be as short as 30 days to as long as a year, depending on the condition — in which the condition in question hasn't gotten worse.

McAleer says that there are "always ways you can get a pre-existing condition covered," but it will inevitably mean higher insurance premiums.

Can a doctor's opinion affect how an insurer assesses a pre-existing condition?

Most policies look at whether a condition is stable or not, and "that’s where a doctor's opinion might come into play," says Frank.

However, a doctor's view on the stability of a person's pre-existing condition might not matter if it doesn't meet the terms set out in the insurance policy, Frank says.

For example, the fact that your doctor says you can travel 30 days after having minor surgery might be irrelevant if the insurer states that you need to be "stable" for 90 days.

What bearing does a pre-existing condition have on an insurance claim?

If someone has an accident while on vacation and makes a claim, and the insurance company discovers that the person had a pre-existing condition, it could be grounds for denying the claim — even if the pre-existing condition had no bearing on the emergency.

"The pre-existing condition that the insurance company seizes on doesn't actually have to be connected materially to the actual claim that you're making," says Sivan Tumarkin, an insurance and injury lawyer in Toronto.

Tumarkin says that if an insurance company investigation reveals a pre-existing condition after the fact, the company could claim they were misled.

"The insurance company says, 'Had we known that you have high blood pressure or cholesterol or a previous history of cancer, we would have quoted you a higher amount. So therefore, you didn't tell us everything we should have known, therefore we gave you a policy on the basis of a misrepresentation,'" says Tumarkin.

McAleer says that in a recent survey, the Travel Health Insurance Association of Canada found that 40 per cent of respondents "didn't know what kind of travel insurance they had, let alone whether [the conditions they had] had been covered."

The key to avoiding any surprises is familiarizing yourself with the terms of your travel insurance policy, and calling your insurer if you have questions, says Leonard Sharman, senior media relations adviser at the Co-operators insurance firm.

"No policy covers everything, so don't just check a box and say, 'I'll take that insurance,' and assume that you're covered," says Sharman.

"Whatever age you're at, it's worthwhile to do your research."

So if a person's claim is denied, does that automatically mean they're on the hook for that money?

While receiving a denial letter from an insurer might seem like the final word on the claim, it isn't necessarily so.

If a claim dispute makes it to court, it's possible that a judge might rule in favour of the insured if the defence demonstrates that the individual filled out the health questionnaire in good faith and genuinely misunderstood the parts in question, says Tumarkin.