Philadelphia Personal Injury Lawyer Blog

On October 14, 2011, Wise Bread wrote an article for U.S. News entitled 5 Common Travel Insurance Myths.  The article listed the following common misperceptions about travel insurance::

1. Emergency medical assistance is included

2. Having trip protection with a credit card is sufficient

3. Travel insurance doesn't cover airline delays

4. Activity-related Injuries aren't covered

5. You don't need rental car damage protection

I agree that consumers should be aware of these common myths prior to purchasing travel insurance.  However, I am supplementing this list with what I believe is perhaps the most important tip of all.   

6. Don't purchase travel insurance unless you are willing to fight to get your benefits.

Perhaps the most common myth regarding insurance is that the insurance company will honor the insurance agreement and fairly pay your claim.  In my personal injury practice, I see valid claims denied and undervalued by insurance companies on a daily basis.  Insurance companies know that most insureds do not have the experience or resources to stand up for their rights so they routinely deny valid claims in hopes the insured does not pursue the matter. 

A few years ago, my mother purchased travel insurance in case an emergency prevented her from going on a cross country trip.  As luck would have it, upon arrival at the airport, my mother realized that she had forgotten her identification.  Without an ID, she was not allowed through security and missed her flight to the west coast.  Therefore, she filed a claim under her travel insurance policy since this unanticipated emergency was clearly covered.

To her surprise, the claim was denied.  I took up the appeal on her behalf, which, by agreement, went back to the insurance company for a second review.  The insurance company denied the claim again.  As per the policy, the next step was to submit the claim to binding written arbitration.  I spent several hours drafting an argument to the arbitrator regarding why my mother had a valid claim.  Perhaps my most convincing argument was that the insurance company denied the claim twice - failing to cite any policy exclusion or reason.  Finally, a win.  The arbitrator found in my mother's favor and she was awarded the price of her airline tickets.  The whole process took months to resolve and stole many hours of my time.  All for an award totaling approximately $500. 

In summary, I believe the most important thing to keep in mind when purchasing travel insurance (and any insurance) is that even if you are covered it is likely your claim will be denied or undervalued and you will have to fight the insurance company.  So I pose the question, is travel insurance really worth it?

Perhaps the only thing worse than being seriously injured in a car accident, is when YOUR insurance company fails to pay in good faith.  After paying insurance premiums year after year after year, drivers expect their auto insurance company to fairly evaluate claims and promptly make a good faith payment if they are injured in an accident.  Unfortunately, this rarely happens. 

Automobile insurers in New Jersey are notorious for failing to pay valid claims and delaying payments for as long as possible.  Although New Jersey has enacted laws to protect insureds from their insurer, the legislature has failed to provide incentive for insurance companies to abide by the law.  

For example, N.J. Stat. Ann. § 17:29B-4(9) prohibits a myriad of unfair practices, including: failing to acknowledge and act reasonably promptly on communications relating to claims under insurance policies; not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability is reasonably clear; compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds; failing to promptly settle claims, where liability is reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage; failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.

However, even if it is proven that an insurer has failed to follow the law and provide prompt and fair compensation to the insured, absent egregious circumstances, the insured has no right to recovery for punitive damages.  (Punitive damages are designed to punish a defendant and deter bad conduct.  They are awarded in many states when insurers fail to negotiate in good faith).   Instead, in New Jersey, the measure of damages if an insured can prove bad faith is only foreseeable consequential damages.  By failing to provide for punitive damages, auto insurers have almost no incentive to pay claims fairly knowing that failure to do so will at most cost them prejudgment interest and litigation costs.  That is a minimal additional exposure, and really does not provide any incentive, because they have held the money all along and received the benefit of it.

These pro-business (i.e. pro-insurance company) laws come at the expense of all insureds and accident victims in the state.  I encourage you to contact your senator and congressman and encourage them to pass legislation that will hold auto insurance companies accountable for their failure to act in good faith.