When Is “Covered” Not Covered?

Insurance policies are like warranties.  There is a general idea of what they are and what they mean; and there is the carefully worded and clearly defined 50-page document that is exactly what they are and what they mean. 

Not the same thing. You should notice the difference.

Warranties protect the manufacturer from some common law ideas like “fitness for use.”  If the manufacturer provide a 20,000 kilometer warranty on part A, they are in the clear if it breaks at 30,000.  They might not be if a court decided that 50,000 would be a good limit given reasonable expectations in use and the like.  Warranties protect manufacturers more than they protect you.

Similarly, a disability insurance policy.  If you do not understand the meaning of “disabled,” you have no idea what you own.  “Any occupation,” “regular occupation,” and “own occupation” are fundamentally different.  The premiums are likely double from low to high.  There are at least 20 other variables that matter.

My latest find is in group insurance, specifically, out of country coverage.

Let’s suppose you have 60-day out of country coverage.  You intend to be away 70 days.  Do you have coverage for the first 60 days?  Answer.  No!  You have none.  Most bank credit cards work that way too.

Along the same line, pre-existing conditions are subtle. If you change the dosage for your blood pressure meds 60 days before you leave, will you be covered?  Probably not for anything that relates to the meds.  Most carriers want at least 90-day stability to provide coverage and some want 12 months of stability.  If you ask for a preliminary ruling, you will get a “Sorry we don’t know the answer until we have the facts of the case.”

You will be relying on “the discretion of the insurer.”  While insurers are generally fair, they are in business and you can’t be sure the adjudicator will be having a good day.

Insurance policies and warranties are too important to leave to fuzzy ideas of what they mean.  Ask for help from your advisors and pay attention.  If you want to take a chance, that is up to you, but your advisor may very well ask you to sign a form that they explained the limitations and you decided to ignore them.

On another front, if you intend to travel outside the country you should be sure the doctor changing your meds is doing so for a good reason.  Not just trying things. You can invalidate your coverage for no good reason.

It takes a long time to save the money it would take to pay for an uncovered event in a foreign country.  Be a little proactive.

For some of the coverages on line.  Check the definitions.  Some of them are in the form, “If you have a claim, we won’t pay, but you can stop paying premiums.”

Knowledge precedes good decisions.


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Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: don@moneyfyi.com  

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