The story
While in New Zealand as a student Julia arranged comprehensive travel insurance with No Worries Insurance. Julia disclosed her pre-existing medical conditions, including a hormonal condition, to No Worries Insurance as part of the application process. Julia also told No Worries Insurance she was being monitored following an operation she had had for the hormonal condition.
No Worries Insurance wrote Julia a letter and agreed to provide cover for her pre-existing medical conditions if she paid an additional $100 premium. Julia paid the $100 and believed her pre-existing medical conditions were covered.
When Julia changed doctor, her new doctor asked her to have some blood tests and a scan to make sure there was no recurrence of the hormonal condition following the surgery. Julia assumed No Worries Insurance would cover these costs, and went ahead incurring costs of $1,500. No Worries Insurance initially declined the claim saying the costs related to a pre-existing condition. Later No Worries Insurance referred to an exclusion in the policy saying the costs were for continuing treatment of an illness that started before taking out the insurance.
Dispute
Julia said No Worries Insurance’s decision was unfair. No Worries Insurance’s letter gave the impression that if she paid an extra $100 her condition was covered. Julia also found the complaints process stressful, saying No Worries Insurance should not have declined her claim relying on a pre-existing condition when she had disclosed her pre-existing conditions.
No Worries Insurance said that, regardless of the letter, Julia should have read the policy which clearly excluded cover for continuing treatment of an illness. No Worries Insurance said that if Julia experienced an entirely new episode of the condition it would cover the associated costs.
FSCL’s review
On reviewing the policy we agreed No Worries Insurance was not obliged to cover Julia’s condition. The policy limited cover to an illness that occurred on the journey, and excluded from cover medical expenses incurred for continuing treatment of a condition that started before taking out the insurance. The medical expenses were a follow-up to the surgery Julia had before taking out the insurance.
However we felt the letter offering to cover Julia’s pre-existing conditions was misleading. We considered No Worries Insurance should have explained cover was limited to a new event and drawn Julia’s attention to the relevant policy provisions.
We considered the misleading information had limited Julia’s choices. If Julia had known No Worries Insurance was not prepared to cover the on-going monitoring of her condition following the surgery, Julia may have approached other insurers for cover. Alternatively she may have proceeded with cover from No Worries Insurance, but approached her appointment with her new doctor differently.
Outcome
We proposed, and both Julia and No Worries Insurance accepted, compensation of $800 in recognition of the stress and inconvenience caused by both the misleading letter and difficulties during the complaints process.
Lesson
No Worries Insurance has changed the wording of its letter offering to cover pre-existing conditions to avoid similar confusion in the future.
