A recent decision from the British Columbia Court of Appeal suggests that clients who take out medical insurance for travel need to keep a close eye on the fine print. They cannot rely on their agents to flag key points for them.
Given that many clients would never consider reading these dense and voluminous documents, that could take a lot of effort. But failure to understand the policy could result in massive medical bills from foreign travel.
The plaintiff wife in the case, Turpin v. The Manufacturers Life Insurance Company, had sought medical help for mysterious abdominal pain on Sept. 23, 2007, in Victoria. After a course of antibiotics, she was pain free by Sept. 27, 2007.
The Turpins then prepared for a trip to California in early October, including the purchase of medical travel insurance. But the preparations did not go far enough. Notes the decision: “The agent from whom [Ms. Turpin] purchased [the medical insurance] told her there were limitations or restrictions in the policy, but did not explain them [emphasis added]. The front page of the policy also advised there may be limitations and exclusions to coverage and stated ‘PLEASE READ YOUR POLICY CAREFULLY BEFORE YOU TRAVEL.’ Ms. Turpin did not read the policy.” (The trial decision notes that the policy was sold by the insurers agent “‘off the shelf’ as it were.” The trial decision also notes that, even if she had tried to read the policy, “she would have found it difficult to understand, with its myriad of excluding conditions, variously applicable, or not applicable, to an infinite array of possible risks.”)
While in California, the plaintiff wife suffered abdominal pain. She eventually spent five days in a Newport Beach hospital before returning to Victoria. In December of that year she had an appendectomy in Victoria.
The wife submitted a claim for $27,170.81 to the insurer in October of 2007 and noted that a diagnosis was “not yet made.”
The insurer denied the claim on the basis that the abdominal pain she experienced in California was an “unstable pre-existing condition” and that coverage was therefore excluded. The relevant section of the policy stated that there was no coverage for “pre-existing conditions or related medical conditions which were not stable and controlled during the 90 day period immediately preceding your effective date.”
The trial judge, although finding that the policy was unambiguous, found for the wife, using the “reasonable expectations principle,” as described in several Ontario court decisions; that principle has been applied to avoid interpretations of ambiguous contracts that lead to results which neither party reasonably contemplated when they entered into the contract.
The B.C. Court of Appeal, however, overturned the trial decision. It agreed that the contract was unambiguous but then departed from the trial judge’s conclusions. In holding for the insurer, Justice Neilson stated: “In my view, the weight of authority, at least in this province, suggests that nullification of coverage and the reasonable expectations of the parties are not doctrinal concepts, but simply interpretive aids to be invoked in the face of ambiguity, and directed to a resolution that favours the insured.” Justice Neilson further noted that, in any event, “I am satisfied that trial judge erred in finding the facts supported coverage for the Turpins.”
The court also noted what it expects from clients who purchase such policies from insurance agents. The burden of understanding the policy, it concluded, stays with the client. “While the agent did not explain it, she did advise Ms. Turpin it had limitations and restrictions. As well, the cover of the policy included a warning that ‘coverage may be subject to exclusions or limitations,’ and a statement urging the insured to read it carefully. Ms. Turpin did not read it. With respect, it cannot be that simply requesting travel insurance, receiving a policy, and then not reading it can operate to create a reasonable expectation of coverage that will overcome the clear words of the policy. Indeed, it is difficult to understand how an insured could have a reasonable expectation of what loss may be covered if she has not read the policy. Moreover, the trial judge’s finding that, had she read it, Ms. Turpin may have found the policy difficult to understand is speculative and irrelevant, in that the test for the reasonableness of her expectations is objective.”