WATCH ABOVE: A travel insurance company refuses to pay the claim of a Toronto man whose trip to Peru was interrupted because of flooding. As Sean O’Shea reports, AIG insurance says coverage does not include natural disasters.
TORONTO — A Toronto man whose Peruvian hotel was rendered uninhabitable because of flooding can’t claim any reimbursement through his travel insurance, according to the policy’s underwriter.
Ben Bigio of Toronto travelled with a friend in May for a two week outdoor adventure in Peru. When he left Canada, he had no idea there might be a problem where he was going.
Upon arriving at the lodge, which he had prepaid in full, he discovered the accommodations were partially inundated by a flood.
“Some of the lodge was actually submerged underwater,” said Bigio, showing photographs of buildings deluged by floodwater.
Bigio and his friend stayed three days at the lodge while attempting to find alternate accommodations, a prospect made more difficult by the lack of Internet. Neither traveller spoke Spanish.
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For the rest of the trip, Bigio incurred additional, uncontemplated expenses because the original lodging was not available. The costs included hotel room and flight change charges.
Prior to the trip, Bigio purchased comprehensive travel insurance through a a company called World Nomads. The organization’s insurance is underwritten by AIG Insurance, whose Canadian head office is located in Toronto.
Bigio says the insurance was designed for adventure travellers and was marketed to those participating in higher-risk activities like zip-lining, ocean kayaking and travel to the Amazon.
But when Bigio filed an insurance claim for $1,500, a portion of the costs he incurred as a result of the flooding, he says he got bad news from AIG.
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In its letter of denial, AIG wrote: “Unfortunately, interruptions caused by natural disasters at your destination are not recognized as coverable, benefits would not be eligible for reimbursement.”
“Your destination was inundated by flooding and rendered uninhabitable at the time you were scheduled to be there,” the AIG statement said. According to the policy wording noted above, there is not coverage for interruptions caused by a destination having been made uninhabitable.
Bigio says he bought travel insurance to protect himself for unforeseen circumstances.
“The average consumer buys travel insurance under the impression that that if the lodging is uninhabitable because of a major flood that happens, they would likely be covered,” said Bigio.
He said he appealed the original denial and was told that if a government travel advisory had been issued, compensation was possible.
“The U.S. had a strong warning not to go,” said Bigio, who researched travel warnings to the region after he got home.
He says when he told AIG representatives about what he found, they said the warnings weren’t relevant.
“They came back and denied and said these warnings are not valid because they were not issued by Canada,” Bigio said. Canada had not issued an official travel warning to the region.
Global News contacted AIG for comment on the claim. Outside AIG offices on Wellington Street, building security personnel told a camera crew it could not record video of the building, even from the sidewalk. A representative of the building made a rude gesture at the crew during a discussion.
When police were called, an officer informed building security that Global News was within its legal rights.
Lynn Whitburn, communications director for AIG in Toronto told Global News the company does not comment on claims issues and cited privacy laws, in a written statement.
AIG, once ranked as the world’s largest insurer and received $182.3 billion in U.S. government bailout funds during the 2008 financial crisis after the company was considered “too big to fail”.
During the crisis, AIG came under fire for intending to pay out $165 million in bonuses and compensation to senior executives.
Ben Bigio says AIG has not acted fairly on his $1,500 claim, considering World Nomads indicated it would pay claims to someone travelling and affected by a natural disaster.
“You think they have your back in times of distress. It’s the exact opposite. I want my money back.”
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