The Policy for the Travel Insurance and Legal Concepts

Executive Summary

The travel policy that is offered by Manulife policy offers a series of benefits to the insured who buy the right policy. The clauses in this manual explain the six categories of travel insurance that this firm offers. The first one is the Emergency Medical Insurance Policy. This policy is meant to cover the expenses that the insured may incur due to medical emergencies when one is on the trip. The insured is expected to call the Assistance Center the soonest time possible in case such an emergency arises. An individual with the right insurance plan can get the medical emergency costs covered to a tune of $ 5,000,000 CND under this policy. Another popular policy that is offered by Manulife Financial is the Trip Interruption Insurance Policy. When one sets on a trip to a given destination, it is not easy to predict the eventualities. Sometimes these eventualities may lead to interruptions. Trip interruption may have direct financial consequences. For instance, when one was going to sign a contract and the interruption leads to the collapse of the intended deal, then there may be financial consequences that may arise. In some cases, an interruption may lead to a situation where one loses an already booked flight, forcing one to pay for another flight. This policy covers such eventualities. Baggage Damage or Loss insurance Policy covers events where one loses a property during the trip. Travel or Flight Accident Insurance Policy is another popular cover offered by this firm. In the event that one is involved in a flight accident, this policy offers as much as $ 100,000.

It is important to understand that legal principles that should be followed in order for one to qualify for the insurance cover. Accidents that arise from personal decisions such as cases of suicide are never compensated. A loss that results from cases of negligence or any error or omission of commission does not attract any compensation. It is also important to note that there are legal processes that an insured should follow in order to get the right compensation. Failure to follow these legal guidelines may lead a situation where the client gets a reduced compensation. In some cases, such omissions may make the insured to loss the expected compensation. Such issues may bring constrains, and therefore, should be eliminated. It is recommended that the clients should have the right information in order to avoid such misunderstandings.

Introduction

Travel insurance is one of the most popular insurance policies in the world today. The emerging technologies have transformed the world into a small village. The need to travel from one region to another for business purposes or for personal issues has increased. According to DuPlessis et al. (54), in the current global village, the need to move from one part of the world to another has become more necessary than ever before. Business entities have realized that the only way of remaining relevant in the market is to go global. Tourism industry in various parts of the world is also expanding rapidly due to the increase in the population of the middle and upper class members of the society. Living standards in Canada is improving and this means that more people can now afford to travel easily from this country to various parts of the world for leisure or official duties. However, it is important to appreciate the fact that some uncertainties may affect the travel programs. These uncertainties may cause delay for the travel because of various forces. Sometime the travel may be canceled completely or postponed to a future date. These delays or cancelations may cause financial or psychological loss. When one was travelling to address a business errand, then a delay or cancelation may lead to a serious business loss. For instance, an individual could be travelling to sign a business deal with an individual or a business entity in other parts of the world, such delays or cancelation may lead to a serious loss. If the business or individual succeeds in convincing the other party to postpone the signing of the deal, there will be a perception developed by the other party about the unreliability of the party that failed to arrive at the designated place in time. This is not good for a business that is operating in a highly competitive environment.

Sometimes events may take place during the course of the travel that may lead to a loss to an individual or a business entity. Accidents are some of the possible uncertainties that may occur causing serious damage or even loss of life. In such accidents, there is also a possibility of loss of life. Sometimes acts of terrorism may occur during the time of travelling which may have far-reaching consequences. This makes it necessary to have a travel insurance policy. This insurance policy helps in covering such uncertainties such as delays, travel cancelations, accidents or acts of terrorism. When taking the travel insurance, it is important to understand the legal concepts of the cover in order to understand risks which are covered and that that are not covered. In this paper, the focus will be to analyze the marketing terms found at the bottom of a policy for travel insurance subject to Ontario laws

Objectives

The objective of this paper is to critically analyze all the sections and clauses of the travel insurance policy in order to provide a detailed understanding of the legal concepts and make recommendations on how they should be applied for the benefit of both the insurer and the insured. According to DuPlessis et al. (65), insurance companies are business entities with a sole objective of maximizing their profits. This means that they will always try to find excuses not to pay for compensation even when it is clear that the loss was caused by an event that was covered by the insurance policy. On the other hand, the insured will always want a compensation for every loss, even in cases where the loss is caused by an event that is not covered by the policy. Such conflicting interests may affect the relationship between the insured and the insurer. For this reason, it is necessary to have a clear legal terms defined properly that specifies the relationship between the insurer and the insured. It is important to define how these clauses work, and how an individual should go claim the compensation when the insured risk occurs. It is also important to make necessary recommendations on how the current law can be modified to fit into the current society in order to benefit the two main parties in an insurance policy. This is the main objective of this document (Koller 55). The researcher believes that this report will not only act to inform the relevant parties about various concepts of travel insurance policy, but also make policy recommendations that will be of benefit to the insurer, the insured, and all other stakeholders in an insurance policy.

Ethical issues

When conducting research, it is always important to take into consideration issues relating to ethics. A piece of research is a very important document that can be relied upon by an individual or an entity when making critical decisions. It is, therefore, very important to observe ethics knowing that the piece of research may be an important document to various parties. In this study, the researcher was keen to maintain ethics in the process of collecting, analyzing, and presenting the data. During the collection of data, it was ethically necessary to defend the identity of the individuals who participated in the study (Van 27). Sometimes the views given by an individual may be a source of criticism if they are in conflict with the views of the majority of members of the society. To counter such problems, the researcher ensured that the identity of the participants remained concealed. The researcher was also keen on managing personal biasness when collecting and analyzing the data. Some of the opinions that the researcher gathered were in conflict with personal beliefs. However, the researcher did not make an attempt to make personal opinions prevail over the data collected from the field. This was necessary to enhance the validity of the study.

Methodology for the introduction

I was interested in gathering the relevant information before starting the paper. I considered secondary sources of information to be appropriate in formation of the foundation of the research. I was keen to avoid scenario where my work would be considered to report on the same thing that other researchers had reported about in the past. Collecting and analyzing the literatures proved very important in helping me to develop an understanding of the travel insurance policies. I then studied very closely, the manual given by the two insurance companies titled ‘Manulife Global Travel Insurance Policy’ to get a closer understanding of travel insurance policies in the local context. This made it possible to write the introduction and prepare to address the entire paper.

Methodology for the clause description

In describing the clauses, the first thing that I considered to be very important was to get a clear definition of the terms such as the insurer, the insured, insurance policy, insured risks, uninsured risks, transferable and nontransferable risks, and many other terms that are related to travel insurance. The dictionary, online sources, and individual experts in the field of insurance proved important in understanding these terms. I then identified all the clauses that exist in the policy in the travel insurance policy. It was easy to understand some of the clauses. In other cases, I found it difficult to understand the clauses. This forced me to consult some experts in this field to get a clear meaning of some of these words. The class notes were also very important at this stage of the research.

Methodology for application of legal principles

In order to under how the legal principles are applied, I found it necessary to visit Ottawa courthouse to listen to the proceedings relating to similar cases. I also went through the court archives to visit the previous cases in order to determine how some cases were decided. The class notes and materials found on legal journals also helped a lot at this stage. I also interviewed legal experts in contract law, especially those who have specialized on the issue of insurance in the local context. These various sources of information made the process of interpretation very easy.

Methodology for application of the agreement

In order to understand the application for the agreements, I first went through my class notes. I then looked for copies of such agreements in order to understand how the insurance companies explained various concepts and the relationship between the insurer and the insured. To get the practical context of this application of agreement, I had to visit a local insurance company in order to understand how this happened. This was followed by an interview of the insurance company’s agents, and their customers who had been involved in this process. This way, it was possible to write this section of the report.

Methodology for the recommendations and lessons learned

Finally, it was necessary to give recommendations and lessons learned. To do this, I first went through the entire report to identify issues the participants in this research identified as needing some ratification. I based my recommendations on the views of the participants and personal knowledge based on what was gathered from the field. This way, I was able to give clear recommendations and lessons learned.

Description and Explanation of the Clauses of the Document

Introduction clause

This clause acknowledges the responsibility of Manulife Financials as an insurance firm that offers insurance solutions to their clients whether they are travelling within or outside their province. It appreciates the fact that no one can predict the events that may take place when one is travelling. This makes it necessary to take insurance cover against the unforeseen tragedies that may lead to loss (Gosdin 74). It also explains that the travel insurance policy is available in all the provinces in this country, including the province of Ontario.

Clause 1.0

This clause provides a summary of the travel insurance coverage. It offers information, in tabular form, about specific insurance offered and the coverage amount per individual insured. The insurance solutions offered include emergency medical during the time of travel, trip interruptions that is not caused by the insured, luggage damage or loss, luggage delays, travel accidents, and flight accidents.

Clause 1.1

This clause defines the underwriters of this insurance cover. It specifies that the policy was underwritten by The Manufacturers Life Insurance Company and First North American Insurance Company, both being subsidiaries of Manulife Financials.

Clause 1.2

Under this clause, it is stated that anyone who purchases this insurance will automatically get their children who are aged over thirty days but less than two years old covered at no extra cost.

Clause 2.0

The clause focuses on medical concierge services as an additional value that is added to the customers of this firm when they are travelling to the Dominican Republic, Mexico, or the United States. The services include telephone consultation, delivery of any forgotten or lost prescription or eye glasses, medical referrals to specialists, and access to a physician. All these services are available in these three countries at any time of the day.

Clause 2.1

This is a disclaimer clause that also explains issues to do with waiver and liability limitations. This clause explains that a StandbyMD is not considered a provider of medical services. The clause explains what StandbyMDs can or cannot do in terms of making judgment about the condition of a patient, making referrals, or offering medical services.

Clause 3.0

The eligibility for this insurance is defined in this clause. The first factor is that one must be a Canadian that is covered by the government’s health insurance plan. It is also required that one must be a customer of Sunwing. Before one leaves for the trip, he or she must pay the necessary premiums at the relevant Sunwing’s travel advisor. One must also buy the entire journey’s coverage when booking for the trip. This section also defines what may make one ineligible for coverage even when one has qualified under the above mentioned requirements.

Clause 3.1

For those who are above the age of 75 years, this clause states additional requirements that they have to meet before they travel in order to be eligible for the cover. The first requirement is that the applicant must not have been prescribed or used home oxygen within the last one year before the day of application. The applicant should not be waiting for, or ever had am organ transplant. The applicant should not be HIV positive or be suffering from a terminal illness. Many other medical requirements such as the condition of the heart and cancer-related sicknesses are also talked about in this clause.

Clause 4.0

This clause about the travel insurance states that the coverage begins when one leaves home. It ends when one return home or at the expiry of the date specified on the policy purchased, whichever comes first.

Clause 4.1

Automatic extension is possible under the Trip Interruption Insurance. This clause explains that one can get an automatic extension for three, five, ten, or even ten days if specific conditions are met by the insured. Issues such as a delay by the carrier, medical emergency for the insured or travel companion, or hospitalization are some of the possible justifications of a delay in flight.

Clause 4.2

There are cases where an insured may stay longer than the planned duration due to a number of factors. This clause focuses on such eventualities. The extension can be given when one is yet to start the journey or when one is on the journey. In either case, the extension can be validated through a phone call. The extension will be validated in case the following requirements are met.

• The insured pays the additional premium to the extent of the extension,
• The extension requested for does not exceed thirty days
• The extension is approved by the Assistance Center

Clause 5.0

There are cases where an individual may face trip interruptions that may lead to direct loss. In such events, this firm offers its clients a Trip Interruption Insurance as defined in this clause. There are specific events that this firm covers under this policy. The following are the events that this policy covers.

• When the insured on travel companies has a medical process or dies,
• A member of the family develops a medical problem or dies,
• When the insured’s host is taken ill or dies,
• When a legal issue of child adoption interrupts the planned trip,
• A medical condition where a physician recommends a postponement of the trip,
• When the insured visa or that of the companion is not issued for reason beyond personal control,
• When one or one’s spouse is called to the service or summoned by the court as a defendant or witness,
• When the insured or travel companion is hijacked or quarantined,
• When the insured is not occupy his or her principal residence because of an issue that is not an error of omission or commission,
• A natural calamity that renders the destination accommodation unsuitable for habitation,
• A case where the insured or spouse loses job due to layoffs or unlawful dismissal that may require a change of residence,
• When one misses a connection because of interruption on the road caused by traffic jam, police checking, mechanical failure, weather conditions, or any other natural calamity,
• In case the trip is interrupted, and the scheduled time of arrival delayed for reasons beyond control of the insured,
• If the Canadian government issues a travel advisory against the intended destination,
• In case it is reported that the intended destination is experiencing poor weather conditions or natural calamities that may necessitate cancelation of a flight,
• A delay in departure by the carrier due to natural forces,
• In case the flight is overbooked and the insured is one of those affected by this,
• If the insured passport or that of the travel companion is stolen or lost when one is on the trip.
• If the trip has to be interrupted because of the mechanical problems of the carrier.
• A sudden requirement that the insured or the travel companion must attend an examination on the travel date or a date that one should be on the trip.

Clause 5.1

This insurance company also offers misconnection insurance cover to its clients as defined in this clause. This cover is offered in cases where the misconnection results into a direct or indirect loss to the insured. The following events are covered under this clause.

• When the misconnection is caused by one of the connecting carries leaves later than the scheduled time.
• When the carrier that was booked to provide transportation for a portion of the trip leaves earlier than the scheduled time, leading to misconnection,
• When a delay due to security check and customs clearance results into misconnection,
• When the disconnection is caused by a delay in the carrier because of an emergency such as sickness of a patient.

The insured must prove that he or she made a reasonable effort to continue with the trip as originally planned even after the occurrence of such events in order to qualify for the compensation.

Clause 5.2

In some cases, an individual may be prevented from returning how as pre-planned dues to events beyond personal control. This clause defines the events covered when they arise and cause delay in return.

• Cases where the insured develops medical emergency,
• When a family member develops a medical problem or dies at the point of destination,
• When the travel companion has a medical problem or dies during the trip,
• When the host develops a medical problem or dies during the time of visit.

When these events occur, the insurer caters for additional meal, travel, and essential call costs.

Clause 5.3

This clause is about exclusions and limitations on trip interruption insurance. It defines what this insurance does not cover. It starts by defining the clause ‘pre-existing conditions’ and the world ‘stable’. As stated in this clause, in cases where the interruption was caused by a delay that could easily be rectified if the insured made a reasonable effort to continue with the journey, then the insurance company may not compensate the insured. Similarly, cases where personal negligence, events directly or indirectly caused by the insured or associates leads to delay, compensation may not be issued. Also not covered in this policy are events that occurred leading to delay, but the client had a prior warning about such events but ignored.

Clause 5.4

In this clause, the company defines circumstances under which it offers Default Protection Coverage, specifically for those who have purchased Trip Interruption Insurance. This insurance cover seeks to compensate the insured if the travel supplier defaults to deliver services in time leading to loss. It also covers incidents where the default results into a situation where the insured fails to get part or the entire travel services. Lastly, the insurance policy also covers for losses that are incurred because the travel supplier has delayed to deliver services because of legal issues or natural calamities. However, the benefits have limits as discussed in the clause below.

Clause 5.5

This clause details all the limitations to the benefits offered under the above default clause by Manulife Global Policy. This limitation was set to avoid exploitation by unscrupulous individuals who are covered under a given policy in case the insured event occurs. As explained in this manual, some clients may want to prolong the days under which they should be covered for the sole purpose of earning hire compensation. To cushion this firm against such unfair business practices, the limitation clause explains the limits beyond which a client may not get any benefit from this firm. Manulife Financials has set $1,000,000 CDN as the maximum limit for a default of a single travel supplier. It has also set $ 1,000,000 CDN as the maximum limit for all defaults committed by all travel suppliers within a given calendar year. However, this company appreciates that there are cases when a client’s claim under this cover may justly demand for a compensation exceeding the set maximum target. In such cases, the company policy states that the excess of the set target is transferred to the following year.

Clause 5.6

According to Weir and Ellis (65), there are some losses that cannot be easily defined, and this makes them difficult to insure. This clause talks about losses that are related to some of the risks mentioned above, but cannot be easily defined, hence not covered. Some of the exclusions are events that occur due to errors of omission or commission on the side of the insured. These losses are defined below:

• A damage or loss that is incurred by the insured that is bound to be recovered from other sources.
• A loss due to a default by a travel supplier if, by the time of making the booking, the supplier had declared bankruptcy, is under receivership, is insolvent or facing such similar situations.
• A loss that arises due to the insolvency or bankruptcy of the travel broker, agent or agency.
• A loss that arises from a default of a foreign supplier in case the services promised by the travel supplier are not part of what the insured bought from the tour.
• In case the insured had not purchased the cover policy in relation to the specific event that directly or indirectly led to the loss.
• In case the insured purchases the insurance or makes the booking after the default.
• In case the travel services were actually offered, then any loss that may arise to due to market forces or any other issue that is not insured by this company may not warrant compensation.

Clause 6.0

Clause 6 is about emergency medical insurance cover that is offered by this insurance company. As explained in this manual, Emergency Medical Insurance offers a cover to the insured for all the incurred expenses as a result of emergency medical services offered to the client during the trip. However, the cover will only be applicable if the insured is not under the cover of government health insurance cover plan. The insured should also not be under any other benefit plan that may result into a situation where the client gets double compensation in case of the occurrence of a risk factor. This cover caters for all the expenses that costs $ 5,000,000 CDN or below. Expenses above this limit will have to be met by the client.

Under this clause, this company has provided a number that a client can use to call for support from the Assistance Center. For those who are within the United States and Canada, the toll-free emergency number is 1 800 211-9093. For those who are outside these two territories, the number is +1 (519) 251-7821. The company is very strict when it comes to calling this emergency number so that they can start following up on the issue immediately. When one is not in a position to make the emergency call, the company requires that one should inform a family member or a friend to make the call as soon as possible. In case on fails to make this call, then the 25% of the medical expenses will be paid by the client. This means that instead of paying 100% of the expenses, in case the cost is $ 5,000,000 or below, the company will only pay 75% of the amount (Manulife Financials 16). The following are some of the expenses covered under this policy.

• Expenses incurred because of the need for an urgent medical attention,
• Expenses incurred when the insured receives a professional medical services,
• Ambulance transportation or related expenses arising due to emergency,
• The expenses incurred due to death of the insured,
• Expenses to bring the insured back home for further medical attention,
• Additional expenses for services such as hotel, meals, taxi, or phone call when one is in the process of getting medical attention,
• All the expenses to bring a family member or a close friend to the hospital where the insured is receiving treatment,
• Expenses arising from the need to get emergency dental attention,
• Travel expenses to return minors under the care of the insured home when he or she is hospitalized.
• When an insured is hospitalized, the insurance will meet the costs of childcare,
• There is a cover to take a pet home as one receives treatment.
• In case the insured had a companion recognized at the time of booking, the return-home expenses for the companion will be met,
• When an insured had a vehicle during the time when he or she was taken to hospital, the cover will meet all the costs associated with taking the vehicle home,
• If the insured is hospitalized for more than 48 hours, there will be an allowance of $ 50 in a day. The maximum allowance under this cover is $ 500,
• Baggage return cover is offered for the clients when it is necessary to do that in case one is hospitalized,
• All the expenses incurred in replacing prescription drugs will be met by this firm under this policy,
• In case a hearing aid is lost or damaged, the company will meet the replacement costs to a tune of $ 200,
• The cover also offers a replacement of lost or damaged vision cover to a tune of $ 200.

Clause 6.1

This clause defines some of the limitations and exclusions in meeting the above expenses. In this clause, the company states that losses resulting from personal decisions such as suicide, errors of omission or commission on the side of the insured, the companion, or family member, or cases where one initiates the damage or loss to get compensation are all excluded in this over. This means that if they occur, the client will be personally responsible for all the associated costs.

Clause 6.2

The clause focuses on additional conditions or requirements that are necessary when one is taking Emergency Medical Insurance.

Clause 7.0

This clause is about issues to do with baggage damage, loss and delay insurance. Under this policy, the coverage cannot exceed $ 2,000 per a given trip.

Clause 7.1

This clause talks about the benefits of taking baggage damage, loss or delay insurance cover when traveling. One of the benefits is that the charges are reasonable. The company pays handsomely for any damage or loss of a baggage.

Clause 7.2

Under the clause, limitations and exclusion to this coverage are defined. As stated in this clause, individuals who engage in criminal acts, those who are insane, individuals who are on mountaineering or piloting process do not qualify for this policy coverage. Those who are engaging in acts of war or terrorism are also excluded from the policy.

Clause 8.0

It is about insurance cover for travel and flight accidents. The clause starts by clearly specifying the benefits of this cover. For instance, an accident that leads to loss of limb when one is on a flight attracts as much as $ 100,000 (Manulife Financials 12). There are also other lucrative benefits offered under this clause.

Clause 8.1

The policy does not cover a number of events as defined in this section. Individuals, who are under training to learn how to fly, including their trainers, are not covered under this policy.

Clause 9.0

Acts of terrorism may lead to serious injuries, loss of property, and sometimes even death. Insurance against such occurrences is covered here. The firm offers a policy to cover such eventualities. The firm also covers for the loss due to delays resulting from an act of terrorism.

Clause 9.1

Just like other insurance policies, this policy has some exclusion, cases where one may not qualify for compensation even if it is confirmed that the cause was an act of terrorism. If it is confirmed that the insured had any relationship with the act of terrorism, then no compensation shall be offered. Those who had not paid their premiums at the time of travel may also fail to qualify for the compensation.

Clause 10.0

In this section, the manual focuses on other relevant information that the client should know when taking a travel insurance cover. This clause explains that this insurance cover is void in case a fraud is detected, misinterpretation of material facts at the time of making the application. The manual explains that this contract is subject to statutory provisions in Insurance Act.

Clause 10.1

Under the clause, the manual explains how the insurance cover works alongside other coverage that an individual may have. For instance, some risks that are very costly may require an insurance cover from two or more insurers. It also explains how the insurers will share the costs of compensating the insured in the event that the risk factor occurs.

Clause 11.0

This is a very important clause to the insured because it explains how a customer should make a claim in the event that the risk factor occurs. As expected, the manual provides an emergency number for the insured to call Assistance Center as soon as the event occurs. The numbers have been discussed in the previous clause (Clause 6). It is explained here that those who are not able to make the emergency call because of their medical condition may not face the 25% penalty as stated in clause 6. In case the insurer pays the eligible charges to the healthcare provider, then the client will be reimbursed accordingly.

Clause 11.1

In case one is making an insurance claim to trip interruption, there must be clear report validating the same from a physician if it is because of a medical problem. A report from the police will be necessary if it a legal issue.

Clause 11.2

When making a claim to a default protection, the insured must give the notice in time and present a proof that validates the claim.

Clause 11.3

When making insurance claim for an emergency medical cover, the bills from the hospital must be presented, the diagnosis and a report from the physician validating all the claims.

Clause 11.4

In case the insured is making a claim to baggage damage, loss or delay, there must be a report from the police and any other relevant authority confirming the claim.

Clause 11.5

This clause states that before one can be compensated under travel and flight accident insurance, it will be necessary to present police report, an autopsy in case of death, medical records and other relevant documents.

Clause 11.6

As explained in this clause, all the claims are paid to the insured, unless it is a case of death. When the insured dies, the compensation goes to the next of kin.

Clause 12.0

This clause defines the technical terms used in this manual. They include the following:

• Act of terrorism- an act of threat or violence committed by organized groups targeting a large crowd.
• Act of war- hostile or warlike situation
• Common carrier- airplane, train, bus, boat or taxi
• Default- inability of travel supplier to offer services
• Emergency- sudden unforeseen occurrence
• Medical attention- treatment offered to the insured or related parties
• Medical condition- illness, an injury, or a disease
• Mountaineering- climbing or descending the mountains
• Physician- a doctor
• Travel companion- someone with which, the insured shares a trip
• Travel supplier- provider of travel services
• Trip- the period that starts on the onset of the journey to the time the insured returns home.

Clause 13.0

This firm highly values the privacy of the clients. This clause focuses on its commitment to protecting the privacy of its clients in relation to their health. Although the employees may have access to such private information given the nature of the relationship between the insured and the agents or employees of the insurer, measures have been taken to ensure that such information remain confidential.

Clause 13.1

Under this clause, the manual focuses on the how this firm seeks to protect the financial privacy of the client. Sometimes the client may release very sensitive financial information when making the application for the covers. Such an individual may desire that such sensitive information remains private. At Manulife Financials, measures have been put in place to ensure that only specific individuals have access to such sensitive information.

Conclusion clause

This clause provides a further directive on the steps that an insured should take in cases of emergency in order to get help within the shortest time possible. This clause provides a summary of the services that Manulife Financial provides to its clients when they are on the trip in order to eliminate worries about possible losses that may come from such a process. The manual concludes by emphasizing on the need to make a phone call whenever an emergency occurs to ensure that immediate measures are taken for the benefit of the insured and the insurer (Zweifel and Eisen 97).

Application of Legal Principles

During the learning period, there are a number of legal principles that we have learnt in class that are very relevant to the insurance policies that are offered by Manulife Financials. It is necessary to apply these principles in relevance to the legal agreement defined in this insurance manual provided by this firm (DuPlessis et al. 84). The following are some of the legal principles learned in class that can be put into application in the context of this study.

Legal complexities of transferring an asset

This is a situation where the process of handing over a given property from one individual to another becomes complex because the law does not clearly define who the beneficiary should be. For instance, in this agreement, when an insurer dies and the benefits is to be handed over to the relevant beneficiary, then the law should clearly define how such benefit should be handed over (DuPlessis et al. 48). In case the insured did not specify the person who should be a beneficiary under such circumstances, and all the members of the immediate family have the right to the property, then it may be said that there s a legal complexity in transferring the asset.

Right to be heard

Before a court of law can make a decision in case there is a dispute between two parties, then both parties have the right to be heard. For instance, if Mr. M has an Emergency Medical Insurance Policy with Manulife Financial, sometimes the insurer may feel that Mr. M is demanding for a compensation for a risk that was never covered. When both parties go to court, each party will have the right to be heard before the court can come up with a verdict.

Legal risks

These are occurrences that create legal responsibility in case they cause negative reactions. In the agreement provided in the insurance manual, if a client purchased an insurance cover against a baggage theft and it happens that the baggage is damaged during the trip, then the event will be considered to be a legal risk. In such cases, the insurer has the legal obligation to compensate the insured in case such risks occur.

Contractual relationships

Contractual relationship refers to a legally binding business relationship between two or more parties through signing of a contract. When Mr. M purchases an insurance policy from Manulife Financials, then it will be said that there is a contractual relationship between these two parties as soon as they both sign commitment to the terms as specified.

Environmental issues

These are external forces, either natural or caused by other parties that have direct impact to an individual. These are the forces that the insurer seeks to cover through various plans in case their occurrence may lead to loss to the customer. In the agreement provided, a good example may be theft of a baggage. This is an event that is caused by an environmental factor (a thief stealing the baggage) that leads to a loss to the clients. In case such an event is covered, then the client gets compensated for the loss.

Mediation

Sometimes the parties in a legal contract may have differences that they cannot solve on they own. This may call for mediation. Mediation is a process where parties involved in a dispute identify a neutral person to help them find a common solution. The aim of the mediator will be to make the two parties reach a compromise in a voluntary manner by presenting facts to them. For instance, when Mr. M and Manulife Financials have some differences over an issue with compensation or any other issue, then they may need to bring in a mediator to help them find a common solution over the issue.

Arbitration

Sometimes the mediation fails, it becomes necessary to have an arbitration process. Arbitration is a situation where an independent party (an arbiter) listens to both parties and makes a sound judgment that must be accepted by both parties. The arbiter will be imposing the solution on the parties. As DuPlessis et al. (95) note, the two parties will have the legal obligation to adhere to the solution offered by the arbiter.

Litigation

Supposing that that either Mr. M or Manulife Financials refuses to accept the terms offered by the arbiter as explained in the above section then the two may prefer to have a litigation process. Litigation is a process where the two parties decide to solve their dispute in a court of law. Their case will be presented before a judge who will then make a ruling that will be binding to both parties. This is always the last resort in case the two cannot reach an agreement.

Limitations

Limitations refer to the exemptions. In case of the agreement stated by Manulife Financials, there are some imitations, circumstances where other factors may need to be considered. Taking the example of the Luggage Damage or Loss Insurance, this firm has set a limit beyond which it may not offer compensation under this package. This has been set at $ 2000. This means that if the baggage lost has a value over this amount, then the insured will not be paid in excess of $ 2000. The limitation clause may also define cases where a cause of an event leading to a loss may determine if the client gets compensated or not, especially in circumstances where the client may be involved.

Outsider or third party

An outsider, also referred to as the third party, is an individual who is not in any way, related to a contract signed between two parties. A clear example can be given in the travel insurance policy that has been used in this paper. For example, when Mr. M takes an insurance cover for an emergency medical cover during trip, a travel companion will be considered a third party or an outsider by the insurer. This is so because there will be no legal relationship between the insurer and the travel companion in case they suffer from a risk that Mr. M was insured for under this policy. This means that the cover is specifically meant to cover the risks that Mr. M may face.

Consent

The consent refers to the approval over a given issue. For example, when an insurance company has a legal relationship with an individual such as a case where the individual has a cover, then when the risk occurs, then the consent to make the payments will only be given if it has already been confirmed that all the conditions were met. This means that the insurance company will first investigate the issue and then if it is satisfied, the relevant officer will make consent for the payments to be made.

Notion of an offer

An offer is a promise given by one party to another party that a given product or service will be offered if a given condition is met. The offer must express an intention for it to be legally binding. Manulife Financials has a variety of insurance products that it sells to people within Canada. When a potential customer visits this firm to inquire about these products, the authorized agents will explain the products offered based on the needs of the client. Then the agent will make the offer. The process of informing the potential customer that the product exists, and the firm is willing to sell it to the customer is the actual offer.

Acceptance of an offer

When a client, after understanding the offer, agrees to purchase the product by actually making the payment or promising to make the payment at a later date, then it is said that there is an acceptance. If the potential customer is convinced that the products offered by this firm meets his expectations, then he or she will accept the offer by either making the payment or promising to make such payments on a later date that is clearly defined.

Legal capacity

Before an individual can be allowed to enter into a legally binding relationship, the first thing that must be determined is if he or she has the legal capacity. This refers to the authority that allows the individual to enter into a legal agreement. There are some exemptions that may make one not to have the legal capacity to sign a legal contract. The first one is the age. One cannot enter into a binding business relationship if he or she is considered a minor. At the time of signing the contract, it should be confirmed that one is of the right mind. Individuals who are insane are not allowed to enter into a legally binding agreement. In the insurance policies defined in this manual, it will be necessary for the insurer to determine that the client is of sound mind and of the right age before making a legally binding agreement.

Under the influence of drugs or alcohol

According to DuPlessis et al. (67), when one is under the influence of a drug or alcohol, it is required that such a person should not be involved in signing a legal agreement. This is so because when one is under such influence, chances are high that he or she may fail to reason rationally. He may accept or reject an offer that would have elicited a different reaction when sober. For this reason, the law states that if one manipulated a drunken person knowingly into signing a contract, then such a contract may not be legally binding. This law requires the insurer to ensure that their clients sign the contracts when they are sober.

Misinterpretation

Sometimes there could be a misinterpretation of a clause or a term within a clause that may result into conflict between the two parties. For instance, the Baggage Damage or Loss Insurance Policy offered by Manulife Financials does not clearly state whether cash money may be considered a baggage. This means that when an individual covered under this clause losses his or her money, a claim may be made so that this firm can make the necessary payment. The insurer may argue that the event was not covered under this policy. Such misinterpretations may force the two parties to seek for the interpretation of the court. It is always advisable that the insurer eliminates such cases from ever happening.

Contract termination

A contract may be terminated under various circumstances. All the travel insurance covers that are discussed in this paper will be terminated the moment the insured completes the trip. If the risk occurred, this will end with compensation. If the risk did not occur, then the contract between the two parties automatically stands dissolved. Sometimes frustrations caused by one party to the other party may force the frustrated party to call for a termination of a contract.

Compensations

These are the benefits that the insured gets in case they suffer loss due to occurrence of the risk factors that are under coverage. For instance, if one has a flight accident while under the cover of Flight Accident Policy, then the insured will be compensated as defined in the policy.

Notion of negligence

This clause is meant to protect the insurer against claims in cases where the event leading to loss could have been stopped by the customer or were directly caused by the customer.

Application of the Agreement

The Manulife Financial travel insurance products have been discussed in details in the section above. At this stage, it will be necessary to apply some of the possible agreements that may occur between the insurer and the insured (Anderson 87). In this case, the insured is the client and the insurer is Manulife Financials. As discussed in this paper, Clause 8 talks about the flight accident insurance cover. The first case will be taken from this policy.

Assuming that an insured, who we will refer to as Mr. B is married to Jane and the two have two sons who are currently over eighteen years. Mr. B has listed Jane and the two sons as the next of kin. Mr. B takes the Flight Accident Insurance Policy with Manulife Financials. Unfortunately, Mr. B dies in a fatal plane crush on a trip that was rightfully covered. What happens to the compensation when the three adults, all of whom are listed as the benefactors of Mr. B, cannot agree on how the $ 100,000 should be shared among them? This is a legal case that may require the involvement of the courts of law. The interest here is how Manulife Financials can be involved in the process of litigation to ensure that the outcome will not raise a controversy that may give this firm a negative image.

As Emerson (78) explains, the constant in this case is that the money will have to be released. The only issue that will have to be determined is how it should be shared. The two sons, who have reached the age of majority, may not benefit much from this compensation if it is confirmed that at the time of Mr. B’s demise, they did not depend on him directly for their upkeep. This will be left with the court to decide (Milton 23). The only role that Manulife Financial may play is to provide necessary documents that may help the court to decide who the preferred beneficiary was when Mr. B made the application.

Under the Emergency Medical Insurance coverage, it is explained that this firm will not cover 25% of the cost if the customer fails to make a phone call to the Assistance Center immediately. This clause is open to abuse as it is punitive. On one side, it will be a punishment to the client if the medical emergency may limit the ability of the client to make an immediate phone call under this agreement (Tripathy 75). As suggested in the recommendation, Manulife Financials may need to strike out the clause and find a better alternative requirement. The clause provides that those who are confirmed to be seriously sick are not required to follow this rule. However, this may be a loophole when a client makes a claim that he or she was actually unable to make the call because of his or her medical condition (Kifmann 12). It may not be easy for this firm to confirm whether the client is making a genuine claim or not.

In the Trip Interruption Insurance Policy, a scenario may occur that may raise complexity between the insurer and the insured in providing compensation (Nyman 55). The case scenario below may present this complexity. Mr. P buys Trip Interruption Insurance Policy from Manulife when leaving for a business trip. Under this policy, the insurer promises that an interruption that is not caused by the insured or his companion shall be compensated to the tune of loss up to a given amount. However, it does not provide specific carriers that the insured should use to qualify for compensation. For this reason, Mr. P may decide to use a carrier that is known to be prone to such cases as breakdown because of the desire to get the compensation. The clause says that the insured should make a reasonable effort to continue with the journey. Confirming that Mr. P did make a reasonable effort to continue with the journey as originally planned may not be an easy process. This means that it is easy Mr. P to claim compensations fraudulently because Manulife Financials does not have a foolproof system that can enable it determine genuine claimant from individuals who make fraudulent claims (Mann and Roberts 54).

A client may make an agreement with Manulife Financials for coverage under Baggage Damage or Loss Insurance Policy. When Ms J makes such an agreement with this firm for such coverage, it is expected that when such a risk occurs, then the insurer will make the payments without any delays. However, Ms J may make a fake claim about a loss or damage of a property. For instance, Ms J may buy an item worth $ 2000 and then instruct a friend to load it off from the carrier at a given point. After a friend has made a safe exit with the item, Ms J can then claim that the item is stolen. She will then proceed to make all the necessary documentations and then demand for compensation from the firm. Unless the insurer can hire detectives to investigate the issue and find the truth, such events may force it to pay out fraudulent claims that may hurt its profitability in the market (Cummins 34).

From the analysis of these cases, it is clear that Manulife Financials is facing a number of challenges that may affect its profitability in the market if care is not taken. Some fraudulent claims may not easily be confirmed to be fraudulent; hence the firm may be forced to make necessary payments. It may be necessary to come up with measures that may help eliminate such loopholes when drafting the clauses in these policies. This will help in avoiding cases where this firm is forced to make payments that do not have any legal background.

Recommendations and Lessons Learned

It is clear that Manulife Financial offers a very attractive insurance policy. However, it is a fact that cases of misunderstanding between the insured and the insurer may arise when some policies are not clear. According to Miller and Jentz (115), the need to meet the expectations of the clients is not only important to the clients, but also to the business entity. A firm that meets the expectations of its clients is assured of a team of loyal customers. For this reason, it is in the benefit of Manulife Financial to address issues that may raise concern among the clients. The following are the recommendations that this firm should observe.

Client education

Once a client purchases an insurance cover, it is important to ensure that he or she is subjected to some form of education about what the policy is all about. This will involve defining what is covered and what is not covered under a given policy. The aim of this recommendation is to eliminate cases where client demands for compensation due to the occurrence of a risk not covered. According to Mann and Roberts (37), clients always have high expectations when they take an insurance cover. They may expect the insurance firm to do more that what is in the written agreement. Making such explanations will help in informing the client about the benefits that are to be expected and the events under which such benefits shall be offered.

Close coordination between the insurer, major carriers used by the clients, and the medical facilities

There is a requirement that a client should call the Assistance Center in case of medical emergencies as soon as possible. In fact Manulife Financial has a clause which states that in case the insured fails to make a call as soon as possible, then the payable amount may be reduced by 25%. Some customers may not find this relevant. For this reason, this firm should eliminate the part of the clause that states that a 25% deduction will be effected in case the customer fails to make the call at the right time. Instead, it should form a close partnership with the major carriers and medical facilities in areas where their customers frequent (Johns 86). This way, Manulife Financial may share relevant data with these partners to better the services offered to the customers. The basis of this sharing of data is to make the insurer learn of events such as accidents that involve their clients, or instances where their clients are rushed to medical centers to get medical attention (Dionne 27). This will also eliminate the need to make expensive trips to confirm the payments made by the customers. All the relevant information will be available to the insurer on demand. This will offer an extra value to the clients. It is pleasing when after getting the treatment, one is told that the charges are already taken care of by the insurer. This will attract more clients to this company (Milevsky and Gottesman 117).

Clear definition of all legal terms

According to Marsh and Soulsby (88), not everyone who buys an insurance cover understands the legal terms contained in the documents they sign. Some clients will demand for an explanation of the terms while others may not. Taking time to explain these terms may avoid any future misunderstanding when such a term needs to be applied.

Limiting the compensation to $ 5,000,000

There is a clause which specifies that within a single financial year, this firm can offer the above stated amount as the maximum amount of compensation even when it is confirmed that the claim is more than that amount. This clause should be eliminated. To do this, this firm will need to form a partnership with other insurance firms to share the premiums and costs on covers that are too large to be provided by one firm. The aim is to eliminate inconveniencing the clients by forcing them to wait for 12 months or more for the compensation to be cleared. This may force a client out of business.

Giving a client prier information on cases that may raise conflict

In the manual given by Manulife Financials, it is explained that in case an insured has another cover that covers for a given loss, then Manulife shall not offer insurance cover for such plans. This is legally right, but ethically, it may be necessary to inform the client early enough other than waiting till the risk factor occurs. It may be considered unethical to accept the premiums for a risk that this firm does not cover.

Lessons learned

From this report, it is clear that double insurance is a loss to the insured. It only benefits insures because when the risk occurs, they shall share the cost when compensating the insured. It also comes out that the insurance company has the ethical responsibility to explain to the clients all the legal terms in the insurance cover in order to avoid confusion or misinterpretation. Any other clause that may be used in a legal context should be clearly explained to the clients.

Works Cited

Anderson, Eugene. Masters. Insurance Coverage Litigation. New York, NY: Aspen, 2000. Continually updated resource.

Cummins, James. Changes in the Life Insurance Industry: Efficiency, Technology and Risk Management. Boston: Kluwer Acad. Publ, 2002. Print.

Dionne, Georges. Handbook of Insurance. Boston: Kluwer Acad. Publ, 2000. Print.

DuPlessis, Dorothy, Steven R. Enman, Philip King, and Shannon O’Byrne. Canadian Business and the Law. , 2014. Print.

Emerson, Robert W. Business Law. Hauppauge: Barron’s Educational Series, 2009. Print.

Gosdin, James L. Title Insurance: A Comprehensive Overview. Chicago: Section of Real Property, 2007. Print.

Johns, Gary. Organizational Behaviour: Understanding and Managing Life at Work. Place of publication not identified: Pearson- Toronto, 2014. Print.

Kifmann, Mathias. Insuring Premium Risk in Competitive Health Insurance Markets. Tübingen: Mohr Siebeck, 2002. Print.

Koller, Michael. Stochastic Models in Life Insurance. Berlin: Springer, 2012. Print.

Mann, Richard A, and Barry S. Roberts. Business Law and the Regulation of Business. New York: Cengage, 2014. Print.

Mann, Richard A, and Barry S. Roberts. Essentials of Business Law and the Legal Environment. Mason, OH: South-Western Cengage Learning, 2013. Print.

Manulife Financials. “Manulife Global Travel Insurance Policy.” Manulife Financials, 12 (2013): 1-19. Print.

Marsh, Samson, and James Soulsby. Business Law. Cheltenham: Nelson Thornes, 2002. Print.

Milevsky, Moshe A, and Aaron A. Gottesman. Insurance Logic: Risk Management Strategies for Canadians. Concord: Captus Press, 2005. Print.

Miller, Roger L. R, and Gaylord A. Jentz. Fundamentals of Business Law: Summarized Cases. Mason, Ohio: South-Western Cengage Learning, 2013. Print.

Milton, Arthur. How Your Life Insurance Policies Rob You. New York, NY: Carol Pub. Group, 2010. Print.

Nyman, John. The Theory of Demand for Health Insurance. Stanford, Calif: Stanford Economics and Finance, 2003. Print.

Tripathy, Nalini. Insurence Theory and Practice. New Delhi: Prentice-Hall of India, 2007. Print.

Van, Niekerk. The Development of the Principles of Insurance Law in the Netherlands from 1500 to 1800. Kenwyn: Juta, 2009. Print.

Weir, Jan D, and Shane A. Ellis. Critical Concepts of Canadian Business Law. Toronto: Pearson, 2004. Print.

Zweifel, Peter, and Roland Eisen. Insurance Economics. Berlin: Springer, 2011. Print.