What Travel Insurance Covers During an Epidemic or Pandemic

The following article was originally posted on the Applied Systems blog.

An infectious disease outbreak proves the importance of paying attention to the terms and conditions of your travel insurance policy and reading the fine print. Most travel insurance policies don’t cover trip cancellations for reasons such as fear of an infectious disease.

Standard travel insurance policies generally exclude a traveler’s decision to cancel a trip due to trepidation about visiting areas hit with an infectious disease outbreak like the coronavirus. And once an outbreak becomes common knowledge, most travel expenses related to the outbreak also become excluded by travel insurance policies. This is because insurance providers consider it to have a foreseeable impact on travel.

However, if you want to postpone your trip, your travel insurance company may be willing to change the coverage dates for your policy. Or if you cancel your travel, you may be eligible for a premium voucher that you can use for future travel.

Although standard policies don’t cover all cancellations, some travel policies offer “cancel for any reason” provisions or flight delay benefits that will provide reimbursement. Again, here’s where reading the fine print comes in.

‘Cancel for any reason’ upgrade

Generally, the only way to be compensated to some extent when you need to change or cancel your trip to avoid a high-risk area during a viral outbreak is by purchasing a “cancel for any reason” benefit with your travel insurance policy.

Cancel for any reason coverage is an add-on to a basic travel insurance policy that allows you to cancel your trip for any reason that’s not already covered by the policy. This upgrade is usually about 30% to 60% more expensive than standard plans.

You’ll be reimbursed a portion of your prepaid, forfeited and nonrefundable trip costs, typically between 50% and 75%, regardless of the reason for canceling your trip.

To qualify for reimbursement, you typically have to purchase this coverage within 14 to 21 days of your first trip payment. In addition, you’ll likely be required to cancel your trip at least 48 hours in advance, or you won’t get reimbursed.

Be aware that when these policies become in high demand during a pandemic, some travel insurance companies may limit supply or stop offering the add-on because it was never meant to cover a concentrated risk among travelers like COVID-19.

What’s covered, what’s not

Most travel insurance is designed to protect you in case you need to cancel a trip, lose belongings or require medical attention. But for cancellations related to epidemics or pandemics, only certain reasons qualify. Here’s a breakdown.

Choose to cancel trip: Not covered

Travel insurance will generally cover you if you have to cancel your trip for reasons including adverse weather, a natural disaster, jury duty, an act of terrorism, or the travel company is going out of business. But it won’t protect you if you cancel your trip because you are worried about an infectious disease outbreak.

Airline cancels flight: Not usually covered

Reimbursing a canceled flight is generally the responsibility of the airline, not the insurance company. The same goes for cruise lines, rail companies or any other transportation providers that cancel because of the coronavirus or any other reason.

That doesn’t necessarily mean the transportation provider will cover all expenses. Airlines, for example, aren’t required to refund canceled flights and may limit the extent of the reimbursement. Fare policies vary, so it’s a good idea for travelers to review them before booking a flight.

Contract the disease and have to cancel: Covered

Travelers are protected if they have to cancel a trip because of personal sickness or injury, or the sickness, injury or death of an immediate family member.

Quarantined: Covered

Most standard policies will cover cancellation or interruption if you are placed under quarantine, or if the destination is placed under a mandatory evacuation.

Travel delays and missed connections: May be covered

If an infectious disease outbreak causes delays with a common carrier, like an airline, cruise line or train station, you may have some insurance benefits, like food and accommodations.

Contract the disease while traveling: May be covered

If you contract an infectious disease while traveling and your policy includes emergency medical and medical evacuation benefits, you may have partial coverage during an epidemic or pandemic. Some travel insurance companies don’t base this coverage on foreseeable events. These types of claims are often handled on a case-by-case basis.

Can you get a refund for your travel insurance policy?

If you decide the travel insurance policy you purchased isn’t adequate, some travel insurance companies offer a “free look” period that allows you to cancel the policy for a full refund if you do so within a certain timeframe, provided you haven’t filed a claim under the policy.

The free look period varies by travel insurance company. Some companies offer a 10-day free look and others that give 15 days to ask for a refund.

Credit card travel insurance coverage

Did you purchase your trip using a credit card? If so, you may have limited travel insurance that comes with the card.

In most cases, credit card travel insurance covers prepaid, nonrefundable travel expenses including passenger fares, tours and hotels. These eligible travel expenses will only be covered when the full amount of each expense was purchased with your eligible travel credit card.

Assuming these factors are true, your credit card will cover a canceled trip when you meet “covered situations,” which typically include:

  • Accidental bodily injury, loss of life or sickness experienced by you, a traveling companion or an immediate family member
  • Severe weather that prevents the start or continuation a trip
  • Terrorist attack or hijacking

Precautionary cancellations aren’t likely to be covered. So if you’re worried about traveling for fear of contracting an infectious disease and choose to cancel or change your trip, there are slim chances your credit card travel insurance will provide reimbursement.

When credit card travel insurance may help

If you or your travel companion become ill or receive notice from your physician that travel isn’t advised to an infected area, or because of your health condition, your credit card travel insurance may cover cancellations. And if an authoritative power, such as a governor or mayor imposes travel restrictions, you may be covered.

If you’re planning to travel to an infected area

If you must travel to an infected area that still permits travelers to enter, you should buy extended travel insurance that covers epidemic and pandemic situations, if it’s available.

Before you purchase a policy, check to see if it includes:

  • Coverage for epidemics and pandemics
  • Medical benefits and low deductibles for out-of-pocket expenses
  • At least $50,000 of emergency medical expenses
  • At least $250,000 of emergency medical evacuation coverage

Also, make sure you book fully refundable tickets and reservations, if possible. This way you’ll have at least one less thing to worry about.

Developing crisis may mean evolving exceptions

Because outbreaks such as COVID-19 are developing situations, some airlines are working with customers to provide fee waivers and travel credit. If you want to cancel a trip over COVID-19 concerns and you’re not covered by your travel insurance, contact the airline, hotel, tour companies and/or other transportation providers to see if you can recoup any expenses.

Some insurance companies have temporarily waived policy conditions for certain claims related to COVID-19. Check with your insurance company for details. Even though the full cost of your trip might not be covered, you may be able to recoup some of the expenses.

Indio Technologies

Indio provides insurance application and renewal software to automate the submission process among agencies, brokerages, insurers and the insured. The application provides a fully digital client risk capture and application experience by automating the data population across each individual, unique insurer application. In simplifying and accelerating the submission and renewal process, Indio enables agencies, brokerages, and insurers to create greater efficiencies and value while providing their insureds a digital customer experience.

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