Expert: Timmy Chou - 10/27/2008

Question
QUESTION: My mother purchased travel insurance with a package plan cruise to alaska through Legendary Travel in Florida on 4/21/08 (she lives with me in Ny but was going to travel with her sister from Florida). Trip was 6/1/08 for 7 days. On May 9th she was seen by her doctor for a cold that settled in her chest causing a respiratory infections. By May 22nd she still had the infection and was advised not to travel. She advised all parties that she needed to cancel. The travel insurance was purchased from the travel agency through Universal Assurance group. The received medical records which showed in Oct 2007 she had the same issue, which she did, a cold that settled into chest congestion which lead to an infection. Weak lungs I guess due to asthma. It was not pre existing - which I guess they are claiming - the letter stated "your plan states the event causing cancellation was unforeseen, life threatening occurred after the purchase of this plan and is so disabling as to cause a trip to be canceled or interrupted - We have found that the medical recoreds show that there was no unforeseen change in your medical condition - therefore we are unable to adjudicate your request.
I have a document that states if insurance is paid for at time of deposit the pre existing condition clause is waived - I faxed this to them and they still denied the request. What can we do. My mother is a 76 year old senior on limited income..they owe her $2500.00 for the cruise.

ANSWER: Thank you for your question!

As I always mention, Mediators act as neutral third parties to disputes and never "get involved" in judging the merits of conflict, but merely use special techniques to help the parties decide how to negotiate their own settlement.

The case you describe here is far too typical.  I am not a lawyer and cannot mediate this with you alone but I can respond to your question from my business consulting experience.

Note that this issue may have legal ramifications and you may wish to consult an attorney.

IMO you are entirely in the right, but as you have seen, no one cares.  You appear to have complete documentation of your position, but again, no one cares.

You have to remember that big companies (and many other large bureaucracies from hospitals to utilities) are just large machines with small people just doing their best to clear their desks and make their quotas.  Its not personal, but they know darn well that it will cost you $5k to hire a lawyer and sue them for $2500--which makes little sense.  You may be right, but you will not be money ahead.

You can continue to threaten them but they know you will not bite the bullet and pay to sue, therefore its a waste of time.  

Here's your only effective next step:

1.  You must try to create as much collateral pressure on them as possible in order to create leverage.      

2. You must write and tell your story and publish it far and wide.  Send your letter to:

a.  Your State's Insurance Licensing Office.
b.  Your State's Consumer Protection Office.
c.  Any and all state or city travel associations or tourism boards.  d.  Your local TV stations and newspapers.  
e.  Be sure and tell Legendary Travel that you intend to refer to them in your correspondence to all these folks and that you request that they intervene on your behalf and/or quit using the service.  
f.  The Better Business Bureau
g.  Online rating sites such as AngiesList.com

Mail any letters certified, copy your attorney (if you have one), and the Federal Trade Commission.  Be sure to have the copied groups listed at the end of your letter so the insurance company and Legendary Travel knows you are serious about your threats and that they will be mentioned in all your complaints to anyone and everyone.

If the company is convinced that: 1) you are not backing down; 2) you are going to raise hell and tell everyone; and 3) it will likely cost more money to deal with you than it would to settle with you; than they will make a business decision and take care of you.

These are some ideas.  Feel free to follow up with additional questions.

For your information, the pros and cons of the types of dispute resolution methods follows.

GOOD LUCK!

Arbitration, Mediation, and Litigation

Arbitration: the referral of a dispute to one or more impartial persons for final and binding determination outside of the judicial system

Benefits of Arbitration:

   Confidential, no public record
   Limited exchange of documentation, information
   Quick, don't have to wait for a court date
   Arbitrators have expertise in the subject matter and are trained in conflict resolution
   Cheaper than litigation
   Preserves business relationships

Negatives of Arbitration

   It's a compromise, no %100 winner
   Complex arbitration can be costly
   If not satisfied, may litigate the arbitration procedure
   Poor results with an unskilled arbitrator
   Both parties must agree to cooperate in the process

Mediation: the process by which parties submit their dispute to a neutral third party (the mediator) who works with the parties to reach a settlement of their dispute.

Benefits of Mediation:

   Neutral mediator can objectively suggest alternatives not considered before
   Parties are directly engaged in negotiating the settlement
   Can be quicker than litigation
   Less costly than litigation
   Preserves business relationships
   85% of American Arbitration Association cases mediated find successful solutions

Negatives of Mediation

   may not reach a binding decision
   unskilled mediator

Litigation: using the judicial system to resolve disputes

Benefits of litigation:

   a clear winner and loser
   uses a prescribed set of procedures
   more predictable outcomes
   is final

Negatives of Litigation:

   waiting for court dates can do more harm
   usually more expensive than mediation and arbitration
   part of the public record


---------- FOLLOW-UP ----------

QUESTION: When you say:

a.  Your State's Insurance Licensing Office.
b.  Your State's Consumer Protection Office.

State my mom lives in NY? The trip was booked through a travel agency in Florida (where her sister lives).

Thank you
Diane

Answer
OK.  You should primarily work through the State where the financial transaction happened -- Florida.  Though it doesn't hurt to file claims in NY as well.  You need as much pressure as you can bear and no company likes to see their name trashed in the offices of regulators.  I would do both and make alot of noise.

Good Luck!