California Insurance Commissioner John Garamendi has issued a “cease and desist” order against Trip Assured Inc., a company offering trip cancellation insurance in California, but without a certificate of authority to sell insurance in the state. Additionally, the Tennessee-based company is the focus of numerous complaints, primarily by senior citizens and their families, over its refusal to pay claims.
The cease and desist order, issued on September 29, indicates that the product sold by Trip Assured Inc. meets the statutory definition of insurance, despite the company’s claim that it is not insurance. Consequently Trip Assured Inc. has been deemed to be operating illegally in California.
According to the commissioner’s office, Trip Assured’s product is marketed as financial protection against an unexpected cancellation of a trip. The brochure promises the purchaser a refund of any expenses paid in advance for the trip “…up to the amount of purchase for non-refundable trip deposits, airline tickets, hotel penalties, cruise line and other charges…”
However, there are numerous provisions in the contract which, according to the Department of Insurance, make it highly unlikely that many people will collect any reimbursement. At least 30 claims have been denied for questionable reasons.
In one case, Trip Assured denied payment to a client who “missed” the 72-hour deadline for notifying the company that he would not be able to take a trip. In fact, the client did notify Trip Assured more than 72 hours in advance of the planned trip. However, Trip Assured calculated the 72-hour period from the time the client entered the hospital, not from the time he called to notify the company.
“This is the kind of abusive scam that targets our senior citizens, many of whom may have difficulty with small print, or may not have a full understanding of what they are purchasing,” said Commissioner Garamendi.
State Assemblyman Todd Spitzer, R-Orange, originally contacted the California Department of Insurance on behalf of one of his elderly constituents who had allegedly been victimized by Trip Assured.
The cease and desist order requires Trip Assured Inc. to “immediately cease and desist selling, marketing or offering for sale in California trip cancellation benefits or any other services contract that constitutes insurance pursuant to California law.” Trip Assured Inc. could be fined $5,000 per day for every day it operates without a license in California.