Insurance loopholes: What you need to know about car, home and travel insurance (CBC Marketplace)

this week on marketplace you think you're covered we get home and now we're in financial room but what if you're not ordinary people are out thousands and thousands of dollars the promise to protect i was angry it's a crash course in insurance your car your home your vacation what you need to know that's crazy why are we paying all the insurance we check the fine print and you're not covered we're at this toronto ice rink finding out what's tripping up so many canadians when it comes to insurance we're beginning the lesson with the basics what tom you ready for a skate what i don't do for marketplace how not to fall for insurance great pitfalls canadians spend more than 75 billion dollars on insurance to protect the big things in life and the companies selling those plans are cleaning up why do you buy insurance partly because i have to just for security and coverage for my family kind of the unforeseen events in life to protect yourself in case something happens your home your car your vacation insurance is there to protect you but what we really want to know is are you covered our first lesson is about your vacation going on vacation this winter i think i am cuba jamaica oh florida to california but it's not just the sun that can leave you burned you might get sick or hurt will you buy travel health insurance yes i usually do yeah yes we do travel health insurance is cheap makes us feel safe so a lot of us sign up before we fly erica travels to gold river bc to find out why one couple was left out in the cold tracy and bill jennings decided it was time for their first trip as snowbirds before they left they did what millions of canadians do bought travel health insurance paid 340. and like bill if you're over 60 you have to fill out a medical questionnaire so as far as you knew you went online you filled it out you thought you had travel health insurance yes and did you no apparently not ten days into the trip bill got chest pains numbness in his arm then the bad news a heart attack bill needed immediate surgery for five blockages in his heart the surgeon explained that bill could not be flown home for this because a change in altitude could bring on another heart attack you've got to undergo this very serious operation but at least you won't have the financial stresses involved which is why we bought insurance in the first place unexpected emergency this was unexpected thankfully the surgery went well and they got on with life until back at home six months later the doorbell rang it was a package containing a letter saying that all of bill's medical expenses were now our responsibility and what was the grand total 346 thousand dollars i always thought we live in a tent i think so what went wrong despite bill asking his family doctor for help before filling out that medical form once he made a claim manulife scrutinized it against his medical records and said he should have answered yes to two questions and that made his whole policy null and void and bill's not alone dear mr ransom we acknowledge we've heard from dozens of others who've received similar devastating letters from insurance companies denying their claims your claim is the bottom line is there's something wrong in the industry when people are planning a trip think they have all their t's crossed in their eyes dotted we get home and now we're in financial run the jennings negotiated a lower hospital bill but they're still on the hook for a hundred and sixty thousand dollars ordinary people are out thousands and thousands of dollars susan ang is with carp a non-profit group that speaks up for seniors and often gets travel insurance complaints i brought along a couple of medical questionnaires that people fill out she says those questionnaires pretty much set people up to fail they did not get the protection they thought they had only because they made a mistake on a form that they could not possibly had done correctly do people know everything that's in their medical file that's what's expected of them you know most people do think they know what their medical conditions are but not in the language that's in the form and that's where the disconnect comes the companies say technically it's in writing you're wrong you misrepresented yourself in this questionnaire you know i think it's uh i don't think you can say that you laid everything out and you can read for yourself when it takes both a doctor and a lawyer to interpret the form properly and there's our first insurance lesson make one mistake on that travel health forum you're not covered so you can be on thin ice on the road but what happens if you're traveling on a road our next lesson in insurance has to do with your car we're on our way to the scene of an accident more than a million accident claims are made in canada every year hockey dad richard fisher is about to add his name to the list so basically what happened so i was just we were just driving along heading to the hockey game and they slowed down and i i stopped and i by the time i looked in the rearview mirror this gentleman had driven into me how much damage any idea on yours he hit me pretty good yeah so it's probably gonna i'd hazard a guess it'd be a few thousand dollars for sure but there is one insurance claim he can't make the money he will lose because his car will be worth less after this crash what about the diminished value of the car if you try to sell that car a year from now or less you'll get less than you would if it hadn't been in the accident well that's crazy why are we paying on the insurance i've never had an at that it just burns me because i've never had an accident and i've paid my insurance i've paid my premiums year after year how can that be like we said it's called diminished value or accelerated depreciation basically if you sell or trade in your car after an accident you'll likely be out of pocket even if it's almost as good as new i know it's a little complicated so we're going to show you what we mean we're at this used car showroom in north york ontario setting up a pair of almost identical pre-owned ford escapes these folks are in the market for a used vehicle do you have a preference of either one of them looking at them or looking at them no no they look very much the same they look exactly the same to me they are pretty much the same but watch what happens when we tell them that the vehicle on the right had a major crash costing thousands of dollars in repairs i would expect that to be a better performing vehicle than the one on the right everybody picks the car on the left the one they're told has not been in an accident i think that when a car is in an accident even though it's been completely restored it's never the same as the original so how much of a cut in price would they expect to get for the one in the accident i'll definitely want a huge discount on that i don't know 25 maybe at least five grand and that's diminished value when we come back we hit the road with the man who wants his insurance company to pay for it i was angry that of no fault of mine now my car is ten thousand dollars less and later another insurance story to make your head spin you just think you're doing the right thing for your family and so it's too bad i didn't see it coming we're revealing the cold hard facts about insurance are you covered including something the industry doesn't want you to know the financial loss you suffer when selling your car after it's been in an accident that's crazy why are we paying all the insurance it's called diminished value and out in bc peter fan is going to court to claim it a few years back peter bought himself a limited edition dodge charger then a truck rear-ended the car the damage went all the way right there wow so the even on the sides as well all the way to the side it crumpled the whole back end i came home and saw it and i couldn't believe my eyes my baby peter's insurance covers the cost of the repair is about 13 grand but because he likes to trade in his car every few years he wants to know if the accident will affect what he could get for it one dealership wouldn't touch it wouldn't even wouldn't touch it they wouldn't buy it for me really because they would have difficulty selling it to another buyer and the second dealer's evaluation probably about ten thousand dollars less is what he's offering me from market value what was your reaction what did you think i was angry i was angry that of no fault of mine now my car is ten thousand dollars less due to somebody else's fault for hitting me so peter goes back to the insurance corporation of british columbia icbc and asked them to cover him for diminished value too when you proceeded with this what was the reaction of the icbc to it they basically said that there's no such thing no such thing try telling that to use car dealer nick cabane this car looks in pretty good shape it's in very good shape yeah it's got the m sports package any accidents this one here has no accidents and that's the first question he gets from buyers usually if we say yes it's game over they walk out they're not interested anymore are you stuck with the car then we do get stuck with cars and we try not to buy cars with accidents but the reality is there's lots of cars on the road that have been in accidents people in the insurance industry nick say essentially that diminished value or accelerated appreciation is kind of a mirage it's not real what would you say to them well it definitely is real because there is a loss it's just who pays it's either the insurance company the insured or the owner of the car so if it is real does icbc included in their coverage we ask and they send us this email icbc does not offer this policy and we are not aware of any other auto insurance provider in canada that does but it's not impossible to find a place where diminished value is covered you just have to head due south to georgia has your car been wrecked and fixed then it definitely lost resale value for more than a decade it's been the law here that insurance companies must pay it so we head across town to meet the man who helped make it happen it's designed to fully compensate you and we haven't seen any significant change in insurance rates because of it until recently john oxendine was georgia's commissioner of insurance how much resistance was there from the insurance industry against a law which seemingly would make them just pay out a lot more money they fought it for years and said it would be terrible and devastating and it really hasn't been the sky has not fallen down as a lot of people predicted it may peter fan settled his lawsuit just before trial a thing of beauty for an amount that covered the loss on his beloved charger there's insurance lesson number two selling your car after an accident its value has dropped but you're not covered when we return your home is your most precious possession of all i think the beauty of the mortgage insurance was that we felt we recovered she wasn't are you we're finding out that insurance can often leave us out in the cold one of the common missteps we take is thinking we have coverage since we pay for it if you're paying a monthly insurance premium on time every year do you think you're covered true or false true true true true true i would assume true i'd say true have our skaters figured wrong that's where we begin our final insurance lesson your home from kenmore to calgary southern alberta was underwater this summer it's shockingly disheartening 100 000 people forced from their homes we're just trying to prevent our basement from flooding and i can't imagine the whole house disappearing like that two weeks later toronto gets more rain in two hours than the city normally gets in a month and the freezer is floating ontario's most expensive natural disaster ever i don't know where to start thousands of homeowners were stunned to learn insurance didn't cover them we thought that the natural disaster thing covered it but apparently not floods are one of the most common and costly natural disasters in canada but real estate lawyer bob aaron says home insurance leaves most of us high and dry well people think they have insurance so they look down the back stairs they say uh oh they're six inches or 12 inches of water in my basement i'm covered it doesn't occur to them that it may be dirty water maybe clean water and there's a great difference for insurance purposes whether the water is coming up from the bottom or coming down from the walls or the windows that's what caught so many homeowners off guard water damage is covered in most policies but floods aren't included and neither is sewer backup that's extra so the people at home don't care where the water comes from in their mind they've got flood damage i got a wet basement just fix it just send in the crew and take the water away and fix it but then you find out but then you find out you're not covered and then there's a big bill and you pay for it when it comes to floods the message is don't assume your home is in the clear leanne santos found out the hard way we'll have christmas morning here about another big household bill millions of us have to pay the mortgage so this is uh my husband louis and myself and the girls are in the background leanne and her husband lewis signed up for mortgage life insurance if one of them died before the mortgage was paid off the policy would cover what was left i think the beauty of the mortgage insurance was that we felt we were covered to um like that it would protect us right that my girls would have we would always have the house but her husband died suddenly from a heart attack he was um like my biggest cheerleader right and um sometimes i worry about the girls but at least their mortgage would be paid or so leanne thought turned out her husband misunderstood the form and made a mistake about his medication that's when leanne discovered a practice called post-claim underwriting postclaim underwriting i think is uh an evil stepmother i don't think it's a fair friend you know i don't think it is explained properly and i don't think people understand the scope of what it does to your life simply put the bank gave lewis the policy and charged premiums without doing a thorough check of his health records then the insurance company took a much closer look and denied leanne's claim do you think that's a fair way to to deal with people i don't think it's fair and i think they should do some more due diligence when an application is made and if it matches give coverage and if it doesn't match don't give coverage that sounds pretty practical advice why aren't insurance companies doing that probably because it would take too much time and too much money and they're always covered by the fact that if there's a misrepresentation in the application too bad they're off the hook they're off the hook and thus ends lesson number three whether it's home insurance or mortgage life insurance even if you're paying the premiums it's possible you're not covered what do you think of that i don't think that's very fair um now i will do a little more digging okay tom and we're gonna push it's a fine line between preparation and panic one two three plus so what can you do make sure to read your insurance policy closely and whatever you do don't wait for disaster to strike don't high-five me let me go down again to find out you're not covered you

Channel: CBC News

Views: 995,117

Rating: 4.7851806 out of 5

Keywords: cbc marketplace, Marketplace (Award-Winning Work), Insurance (Industry), car insurance, travel insurance, home insurance, loopholes, coverage, consumer

Id: EaAecKD6roY

Length: 17min 48sec (1068 seconds)

Published: Thu Sep 11 2014