“This seems more like fraud to me”

Ken Smith isn’t the only person affected by the untimely demise of Cruise West. But he thought he wouldn’t be in the same boat as the other stranded passengers. After all, he had travel insurance.

He thought wrong.

His insurance company, Access America, said it wouldn’t cover a company for financial default. I got involved to see if I could help, and I’ll get to the resolution in a moment. But first, let’s hear from Smith.

My wife and I booked a cruise to Patagonia for February, 2011, and paid cash ($9,392) for quite a bit of it to get additional discounts. The deposit of $2,559 we paid with a credit card. We also bought travel insurance online through Access America, a company Cruise West’s agent recommended to us.

Well, with the default, we’ll likely get the deposit amount back from our credit card company, but the cash is in doubt.

Access America says that, even though their online system asks what cruise line is being used, and their dropdown box displays the Cruise West name, they do not in fact cover Cruise West cruises for financial default. We purchased the insurance on August 26, 2010, and Access America says they stopped covering Cruise West sometime in July, 2010.

I spoke to a supervisor who acknowledged that our file shows Cruise West as our carrier, but also says there is no recourse, and I should have checked the last page of the 24-page document they sent me after purchasing the policy, and I would have seen that Cruise West’s name does not appear.

That was our only warning that we had no coverage.

They have offered us nothing except their standard script of “you should have read the fine print,” but this seems more like fraud to me. A quick look at ripoffreport.com shows that Access America and their affiliates have hundreds of complaints against them for failure to pay claims.

Is there anything we can do here to get any money from Access America?

I asked Access America to review Smith’s case. Here’s its response:

We are very sorry that Mr. Smith was one of the customers affected by Cruise West’s closure on September 18, 2010. We understand and sympathize with his situation. The closure of Cruise West has affected many and we are very sorry to see this occur.

While we have provided coverage to many of our customers who had cruises canceled by Cruise West, the policy Mr. Smith purchased did not offer coverage for financial default of Cruise West, nor did he meet the financial default requirement of purchasing his insurance policy within 14 days of making his initial trip deposit.

His policy did include a 10-day money back guarantee, but as that timeframe has long expired, we are unable to honor his request for a premium refund.

Again, we are sorry that Mr. Smith was affected by the closure of Cruise West and we wish him well.

At this point, I would probably jump in and say, “Look, this wasn’t a covered event. Smith should have known.”

I can’t do that.

Anyone who tells me Smith should have read a 24-page document and noticed that Cruise West was missing, is smoking something illegal, and they’d better share.

Seriously, folks, this guy bought a policy in good faith, and he was led to believe it would cover him. Do you really expect me to tell him his $6,833 is lost forever?

I’m sorry, but I can’t. I’m not siding with Access America on this one.

Smith is right. His policy should have covered him.

Update (10/29): Access America sent me the screen shots from Smith’s insurance purchase.

A representative adds:

I wanted to also point out that since Mr. Smith purchased his travel insurance plan through AccessAmerica.com, he was provided with very detailed information about our financial default requirements, as well as a warning that not all travel suppliers are eligible for financial default coverage and that customers should check our list of covered suppliers to see if their supplier is covered.

Certainly, Mr. Smith also had the opportunity to view this information in his policy when he received it, but he also clearly had the opportunity to review the financial default coverage prior to purchasing his policy.

(Photo: Word Ridden/Flickr Creative Commons)

  • W.M.

    I disagree, and I don’t smoke anything. An insurance policy is simply a contractual agreement. Smith entered into a contract that he thought was worth the expense. Nothing presented here provides any evidence that the contract was violated. Only Senators and Presidents can get away without reading what they sign.

    The message here to travelers is simple: Understand what you are buying. Perhaps Access America has improved their website since August, but currently, with only one mouse click from their home page, I can see that “Coverage for Financial Default” is “Available/Conditions Apply” and not automatically included. If Smith were actually worried about this scenario when he purchased his tickets, I’m sure he would have checked the conditions. If he really cared about coverage, he would have looked for a different company that offered such coverage.

    Also, why do you think Access America wasn’t providing default insurance on Cruise West to begin with? Hint: they probably understood that the probability of default was pretty high. Which means the insurance would have been expensive anyway. In essence, Smith didn’t receive the coverage because he didn’t pay for it.

    Likewise, Smith also chose not to pay for this protection when he chose to use cash instead of his credit card. Why do you think discounts are offered for cash? Because credit cards charge a feee. Why do you think they charge a fee? Because they provide services. As this case illustrates, such protection is one of the services credit cards provide. So, Smith chose TWICE to not pay for protection.

    Sorry, but I have little sympathy for adults who make bad decisions and then try to place the blame elsewhere. You can’t call it fraud when the terms of the contract have been upheld.

  • Bodega

    Sadly Mr. Smith made a very bad business decision by paying such a large sum in cash. We never, ever recommend clients do this for this very reason, However, if Mr. Smith lives in a state that has a Seller of Travel law, there could be a way to get his money back. Here in CA we have a fund that can be tapped into for these type of issues.

    Something we also tell clients is that insurance companies do not want to pay out on a claim covered. It is the purchaser’s responsibility to know what the policy will or won’t cover. One page or 24 pages, for this amount of money on a purchase, wouldn’t you make sure you know what you are getting?

  • Robert

    One more thing – Had Mr. Smith booked through a travel agent, he probably would have been offered the same pricing as he received on the internet but a good travel agent would have known that Cruise West was on shakey ground and made sure that he had purchased the correct insurance policy. If Mr. Smith was trying to avoid a travel agent’s fee or if he was trying to get a “deal” he ended being penny wise and pound foolish.

  • dcta

    The agency I work at had several (some of which were mine) couples booked on Cruise West for summer 2011 who were affected – luckily all our clients were able to get all their money back. A few points:

    1. Cruise West never, ever demanded cash payment in order for clients to receive big discounts. CW was doing this for years and was always happy to take credit cards for the discounts – I am not sure why Mr. Smith would have paid cash to do this. I am puzzled – was he booking directly with CW? They generally would have preferred a credit card rather than have the guest wire funds or send a check. Was he working with some “point and click” ersatz Travel Agency that demanded cash in order that they could hold back their commission prior to sailing? (If so, he ought to be going to them to at least get that money back! Believe me, it is likely four figures.)

    2. Another point – we sell Access America and we are very aware that Access America keeps close tabs on all travel vendors and that they are often one of the first to signal a looming financial problem by removing a vendor from their “covered for financial default” list. We noted that Cruise West was removed on July 23 (or 26 – I can’t remember) and ceased sales at that point. Travel Guard, however, did not add CW to their “not covered for financial default” list until after the actual default – they’re not as on top of things (what do you want, they used to be owned by AIG…)

    3. Thirdly, good Travel Agents know that most travel insurers will not cover for pre-existing medical conditions or for financial default if the policy is not purchased within 14 days of the initial payment for the trip (deposit). It’s just the way it is and we counsel clients accordingly.

    I feel sorry for Mr. Smith, but really, why is it that consumers are so blithe about making such large purchases on their own, on line without the benefit of consulting with someone who knows what they are doing?

    And I’m sorry, but that screen shot makes it clear that Mr. Smith had the opportunity to search the list. Let’s be clear: Access was still covering for trips on Cruise West for all other reasons (that are normally covered) – just not for financial default of the line. that link in the screen shot, is the same link I use every time I quote/sell an Access policy for any of my clients.

  • Meredith

    This is a very sad situation for Mr. Smith. I am in the travel industry with AAA. We sell access everyday and they are very good company. Access kept Cruise West on their covered list for vendor default longer than any of us in the industry thought they would. We had been hearing rumblings of problems for months prior. Sometimes as wonderful as online is there is no substitue for someone who knows what is happening in the industry and can advise you about the fine print. I do wish you the best and hope you receive your monies back.

  • http://www.sunstonetours.com Linda Androlia

    I was Cruise West’s top agent. I have a large number of clients in this situation. Other travel insurance companies continued to cover default, AssessA one of the few to stopped. Mr. Smith should have used a travel agent. My clients have been taken care of

    But, bottom line, if it is true as stated and Mr. Smith did not buy his coverage within 14 days of his deposit. Default would never have been covered no matter Cruise West or not..

  • Bonnie Sherman

    Agree with previous comment, and that is another reason to book travel with a professional. A travel agent would know that you need to check for exclusions.
    Some companies have been excluded for coverage, and some destinations are excluded, being temporary or long term.

    Also, paying with cash, despite the discount, may end up being costly. You do not have the protection of the credit card company behind you.

  • SoBe Sparky

    Just like bank fine print and credit/mortgage fraud has led to increasing regulation, so too should travel insurance be federally regulated. Why? State insurance commissioners are appointed in many states by politicians endebted to insurance companies and their lobbyists. So in some states, insurance regulation is an “iffy” thing.

    Typical insurance contracts are not in plain English. Many times they have so many cross-references, (see Para. 102, sub 2b), that they are unfathomable.

    Until the travel insurance companies quit these misleading and deceptive practices, which are not anecdotal but real, travel columnists should refrain from endorsing travel insurance. Hope is good; false hope is a curse.

  • http://richardtede.multiply.com/journal/item/1/1 richardtede

    It is another reason to book travel with a professional Agent . A travel agent would know that you need to check for exclusions.
    and don’t purchase with cash . You do not have the protection of the credit card company behind you.

  • Tony A

    Robert echo your thoughts.
    A financial loss is always a great personal setback especially in this economy. I’m always wondering about the reasons why travelers don’t use certified travel agents. I heard many of them. Mr. Smith took the approach that many take and when they get into an issue, want the resolution to be in their favor. When I read these articles, I just hope that some will learn from this experience.

  • kweed

    I laugh out loud every time I see an article here about travel insurance fraud, scams, not paying out, etc. and the culprit is always Access America!
    Travel agent? Why not use an INSURANCE agent? Travel agents sell whatever plans they are contracted to sell. (and usually whichever one will net them the best commission) A reputable insurance agent will have access to ALL the best plans out there, will KNOW the LAW, and will sell you the right plan for your specific needs. I wouldn’t go to the proctologist if I had a headache, and I sure as heck wouldn’t trust a travel agent with my insurance needs.

  • Bodega

    kweed@Yes, please go to an insurance agency and ask for them to present all their coverages and take their time. They will love taking an hour or two to sell you that $79 coverage while they make $15-20 on it.

    So you learn something here, most travel agencies offer more than one company. We suggest the one that best works for the age of the client, the coverage needed based on their travel arrangement and plans, and when they are taking out the coverage. Silly us for using a company we think offers the best for you. Oh, but isn’t that what you are expecting of an insurance agent as you so stated?

  • kweed

    @ Bodega
    “Yes, please go to an insurance agency and ask for them to present all their coverages and take their time. They will love taking an hour or two to sell you that $79 coverage while they make $15-20 on it.”

    So you’re not interested in spendng time with your clients if you’re only going to make $15-20 on them? Thanks for reinforcing what i just said.


  • Bodega

    We incorporate travel insurance in the booking process, so it doesn’t take us the time you would take from an insurance agent if they even deal in this, which I doubt they do.

    Please don’t paint a broad picture on something you know nothing about. If you had a negative experience, but all means try and find something yourself. We provide options to our clients and provide the ones that work best with what they have just booked with us.

    Sadly, it sounds like the person who booked the Cruise West cruise was a DIY’er and it came back to bite him. So sad to have lost all that money when it never should have happened in the first place.

  • Kevin M

    What galls me is that if Access America’s website for purchasing insurance were properly coded, this kind of thing wouldn’t happen. Done right, you’d select the name of your airline/cruise line/tour operator/whatever, the dates of your trip, and your destination, and the system would come back with options, something like:

    “You are eligible to purchase the following kinds of coverage on your trip:
    -Customer cancels for any reason
    -Customer illness
    -Death in the family
    -Financial default by travel provider

    etc. and then a second section something like:

    “NOTE: The following types of coverage are not available for this particular travel situation:”

    with the list of travel insurance types that AREN’T available, including ones like this where the company believes the risk of financial default is too great.

    Let the customer pick the choice(s) he wants, and proceed to terms, conditions, and check out. But at least there’d be clear warning up front that certain things which might normally be covered by insurance aren’t, in this specific case.

    It sounds to me like the Access America site tells you all the coverages that “might” be available, but you have to read the detailed contract’s 24 pages of fine print to find out which ones you can actually get. That just stinks as a customer service policy – it ought to be possible, it IS possible to provide the customer with a clear, concise list of what is and what is not covered under the policy available, BEFORE purchase.

  • http://www.adventuresmithexplorations.com Todd Smith

    An experienced travel agent would have known when Cruise West dropped off the Access America covered supplier list. We specialize in small ship cruises and we knew exactly which day Access America stopped covering Cruise West for financial default. We then informed our clients accordingly. After that time there were other travel insurance companies that still covered Cruise West (Travel Guard for instance). Travel Insurance policies are complicated and an experienced travel agent is your best resource. Specialty travel is also complicated and it pays to book with an expert who can protect the interests of their clients.

  • Les

    I agree with @Kevin M. A responsible vendor would be clear and visible about non-covered travel suppliers up front. As it happens I’m just about to purchase (and well inside the 2 week limit) travel insurance for next Spring. I’ll read all the damn fine print —- and Access America won’t be in the selection pool.