08 Jan Will Your Travel Insurance Pay For Your Medical Bills If You Are Injured Abroad?
Many people purchase private travel insurance to protect them when they travel outside Canada. They assume that their private travel insurance will pay for all medical expenses incurred if they are injured in a motor vehicle accident while abroad. Recently, a B.C. resident found out the hard way that this is not necessarily the case.
Apart from any private travel insurance, B.C. residents with a valid B.C. driver’s licence have the right to receive up to $150,000.00 in Part 7 medical rehabilitation benefits from I.C.B.C. if injured in a motor vehicle accident in the U.S. Imagine your surprise if you found out that your Part 7 Benefits had to be used to pay your U.S. medical bills before your private travel insurance kicked in. And if your U.S. medical bills exceed the $150,000.00 available to you under Part 7 Benefits you wouldn’t have any funds for much needed rehabilitation once you are back in B.C.
When buying travel insurance, you should ask your insurance broker this question: Is the private travel insurer the first payor? If the private travel insurer is the first payor, it will be responsible for paying your U.S. medical bills and your Part 7 Benefits will be preserved for their rightful purpose – your rehabilitation. If the private travel insurer is the second payor, or what is sometimes called “excess insurance”, then you might find that your Part 7 Benefits will be used to pay your U.S. medical bills. If your U.S. medical bills exceed the $150,000.000 available to you under Part 7 Benefits, then you are left with no money for rehabilitation. Once the Part 7 Benefits were exhausted, the private travel insurance would step in and pay the balance owing on your U.S. medical bills.
The B.C. resident referred to above had a policy that contained the following clause:
“…This deductible applies to the portion of eligible expenses remaining after payment by your provincial or territorial government health plan or other insurance policies, plans or contracts, including private or provincial automobile insurance.”
His policy also included this relevant clause:
“In addition to the exclusions specified in each Insurance coverage, this Insurance does not provide payment of indemnity for expenses incurred directly or indirectly as a result of:
Unless otherwise stated in this Policy (see General Condition, number 2), expenses incurred if other insurance policies, plans or contracts, including any private or provincial automobile insurance, cover the loss. If, however, the loss exceeds the limits of the other policies, plans or contracts and if this Insurance covers losses and periods not covered by those other policies, plans or contracts, this Insurance shall then apply in excess of all other valid insurance. This exclusion does not apply to Accidental Death and Dismemberment Insurance.”
The issue has been adjudicated by the courts in Canada. In the 1994 case of Baker v. Insurance Corporation of British Columbia, the plaintiff suffered injuries in a motor vehicle accident while in Washington State. At the time, the plaintiff was insured under a travel insurance policy which provided for medical coverage in excess of any amount payable under any private or provincial auto insurance plan. The court held that Part 7 benefits constituted amounts payable or recoverable under a “provincial auto insurance plan” and therefore ICBC was liable to pay those medical bills before the travel insurer. This decision was upheld on appeal in 1996.
The 2001 Ontario case of Travel Insurance Co-Ordinators Ltd. v. ING Halifax Insurance Co. involved a plaintiff who was injured in a camper truck explosion while on vacation in Minnesota. The travel insurance policy specifically said that it was a “second payor plan”. The policy also said that amounts payable under this policy were limited to those in excess of what was payable by third party liability, group or individual basic or extended health insurance plans or contracts including any private, provincial or territorial auto insurance plan. The court held that the automobile insurer was the primary carrier. This decision was upheld by the Ontario Court of Appeal in 2002. The Baker v. Insurance Corporation of British Columbia case was referred to.
In the 2006 Ontario case of RBC Travel Insurance Co. v. Aviva Canada Inc., the plaintiff was injured in a motor vehicle accident in Michigan. RBC paid the claim and then applied to the court to be reimbursed by the automobile insurance company, Aviva. The RBC policy made no reference to a provincial auto insurance plan. The trial judge dismissed the application, finding that there was no wording in the policy to support the position that it was excess insurance. RBC appealed and the appeal was allowed later that same year. The Ontario Court of Appeal stated that the issue between the parties turned on the wording of their respective policies. The court held that although the language in the RBC policy was more general (in relation to auto coverage) than was the language in either the Baker case or the Travel Insurance Co-Ordinators case, the language of the RBC policy, properly interpreted, confirmed that it provided excess coverage.
In other words, if you want to keep your I.C.B.C. Part 7 medical rehabilitation benefits available for your rehabilitation should you need it, then demand that the policy you buy is a first payor policy. Otherwise you are paying money for a policy that will cover your expenses by using an insurance policy you already own. Definitely not a good idea!