COMMENT: Pre-existing conditions is a commonly used insurance term many Kiwis can't or don't want to get their heads around.
Many don't know they need to declare illnesses, or even symptoms, before they can receive travel insurance. Some don't declare so they can get a cheaper premium.
Kiwis were touched by the plight of Hamilton woman Abby Hartley, who died in hospital while on holiday in Bali last weekend.
Her insurance claim was turned down as she didn't declare a pre-existing bowel condition.
Claims declined over pre-existing conditions are the most common travel insurance complaint to the Insurance and Financial Services Ombudsman, and can trip up Kiwis in other types of insurance also — including life and loan insurance.
The ombudsman comes across many cases of innocent non-disclosure by people who had no idea symptoms they had were relevant.
One woman had abdominal pains before arranging a holiday, but wasn't diagnosed with ovarian cancer until after the trip was paid for.
Even though she didn't know she had cancer at the time of booking, her claim for her cancelled holiday was declined.
"The policy defined a pre-existing condition as an illness (including symptoms), for which the insured had sought medical attention, regardless of whether or not the illness was diagnosed," ombudsman Karen Stevens said in the case notes.
I'm sure most of us wouldn't think twice about booking a holiday after a short period of dodgy insides.
Insurers can also decline claims because you didn't declare an unrelated illness. In one case heard by the ombudsman, a claim for surgery was declined because the policyholder had failed to declare depression from years earlier.
It wasn't related to the claim but the insurer said it wouldn't have offered cover at the rates it did had it known, says Stevens.
Stevens has called for a "reasonableness test" in respect of non-disclosure to be added to insurance law, which is currently under review in New Zealand.
"My concern is that consumers don't understand the consequences of not providing the information," she says. "That means we have a constant stream of complaints, and some very unhappy people. [We are] often in a position where we can't do anything, because it is the insurer's legal right to rely on the law and the contract to decline a claim or avoid a policy for material non-disclosure."
The safest thing to do is to declare it. The insurance company can choose to charge more to cover the condition, exclude the condition from the policy, or choose not to cover you.
Dare I say I see the insurers' side when it comes to deliberate non-disclosure.
Being refused cover can really hurt, however, as travel-mad Rob Crozier of Otaki found out. Crozier had a cardiac-related episode which, despite being less serious than a heart attack, has stopped insurers offering him any cover.
He is frustrated because if he was a resident in the United Kingdom he could buy a policy for a few hundred dollars more, which he's willing to do.
With travel insurance,what Kiwis often don't realise is that they also won't be covered if they book a trip of a lifetime but cancel to stay back with a family member who has fallen ill with an undeclared pre-existing condition.
New Zealand insurers do what's called "underwriting at claim time". That means instead of checking out your situation thoroughly they accept your money and ask questions later.
Then, when you make a claim the insurer trawls your medical records looking for ways to decline the claim. Because fewer people claim than take out policies this saves the insurance company (and ultimately the consumer) money. But personally I'd rather pay a fraction more to be sure.
Stevens argues that insurance companies should only be allowed to avoid paying out where the policyholder deliberately failed to disclose something. Industry self-regulation isn't enough.
Stevens says she supports a law change in New Zealand to help consumers who accidentally leave out information when applying for insurance.
The real knife twist in those situations is that the person has their insurance cancelled and becomes virtually uninsurable in the future.