The International Travel & Health Insurance Journal has recently summarized some research by an Australian financial website listing the main reasons why insurance claims are rejected (ITIJ Issue 157, 2014).
Intoxicated during accident
The top reason for an insurance claim to be rejected by a travel insurer is that the policyholder was intoxicated at the time of the accident or injury occurred. This is why it is very important to fully understand the limitations of a policy before purchase to understand your risk and not get surprised by a rejection.
Participation in adventure sports
The second most common cause for rejection is because the accident occurred while participating in an extreme sport. Some policies do have coverage for some of these activities. It is important to note that some activities, such as motorcycle riding, while may not be considered extreme to most are NOT covered by some policies without some sort of adventure sports rider. If you are anticipating doing some exciting activity while you travel, be sure to look for a sports rider and furthermore, that the activity you want to do is SPECIFICALLY LISTED on the rider. Some extreme sports, like motocross, are rarely covered, but check out the Diplomat America plan. Other activities, such as bungee jumping or white water rafting can be covered by several plans (Patriot America with rider, Liaison International with rider, Atlas America no rider needed).
Applicant's pre-existing conditions
The third cause for rejection is because the sickness was due to a pre-existing condition. It is important to note that some policies DO have limited coverage for pre-existing conditions for those policies), but these will have limitations. For example, a person must be stable before a condition could be covered. If you are still recovering from illness or surgery, this will NOT be covered. Also, some specific pre-existing conditions are NOT covered generally under any circumstances. The most common pre-existing conditions that are excluded are pregnancy, cancer, HIV infection, and chronic illnesses.
Coverage for pregnancy
That leads to the fourth most common cause for rejection by travel insurers: complications of pregnancy. Atlas America (for travel to the USA) or Atlas International (travel anywhere else) covers complications of pregnancy in the first 26 weeks of gestation. NO OTHER policy will cover such complications due to pregnancy, so if this is of special concern, be sure you get the right policy!
Coverage in restricted areas
The final reason for rejection is because traveler is in a region where they have specifically been advised not to travel. Coverage is not provided in war zones and other places that the US State Department does not recommend travel. If you find yourself in a region where the US State Department advises travelers to vacate, some policies cover and even help coordinate your evacuation from that area. Some policies cover injuries and losses due to terrorism. If any of these are a possible concern in your voyage, you can consider the Liaison Economy policy with specific coverage for terrorist attack.
The only information I would add to a potential client is that it is important, of course, to provide complete and accurate information on your application since this can also be a cause for a rejection later on. Furthermore, you should be aware of the procedure for using your insurance and filing a claim (if necessary). In my experience, insurance companies are more than willing to deal directly with a medical provider to arrange payment (the reverse may not be true). You and/or the medical provider can give them a call and they should answer 24/7 for any medical emergency situation. It may be necessary to pre-certify medical costs with the company BEFORE they are incurred. These are generally high-cost expenses. For example, you must inform the insurance company within 24 to 48 hours of being in a hospital (if possible). In this case, I would not rely on the provider to call, but I would advise you to call yourself, if you are able, to let them know what is going on. They will also be able to help you understand the claims process. When in doubt, I would make the easy, toll-free call and keep your mind at ease.