Travel Insurance and Coronavirus: What you need to know
Steve Weissman March 9, 2020
As the unfortunate Coronavirus situation continues to evolve, travelers are increasingly becoming concerned and turning to their travel professionals for advice.
One of the most common questions we have been getting recently is in regard to Travel Insurance. Being that most people have only a vague understanding of the product, we have put together a clear and simple directive. Our goal is to cut through the fluff by giving a quick, yet comprehensive overview that will help you make an educated decision.
So, let’s get right to the big question: Is Coronavirus covered by Travel Insurance?
In order to answer that, you need to have a general understanding of how travel insurance works.
Most plans are designed to cover two distinctly different situations;
- Losses incurred due to trip related cancellations and interruptions
- Medical emergencies or necessary evacuation that occur while on your trip.
When it comes to trip related losses, it is important to understand that standard plans only cover ‘Non-refundable’ portions of the trip. You can cover any non-refundable portion of your trip, including air, sea, and land and lodging. If the loss is refundable by the airline, operator or any other insurance, your travel insurance will not cover it.
Your plan will detail very many items and scenarios that are excluded from the coverage, both trip related and medical. Make sure you read through the terms and conditions, and ask your carrier for clarification.
In the case of Coronavirus, the critical item to keep in mind is that the vast majority of travel insurance plans exclude epidemics, or what are called ‘Known Events’, from their medical coverage.
Since the Coronavirus has been declared an epidemic by CDC, WHO, US Dept of State and others, this will usually qualify as an excluded coverage if your plan was purchased after the epidemic was declared.
An exception to this would be the coverage offered by Seven Corners through Regal Wings, which does not exclude Known Events or Epidemics. You would be covered for Coronavirus related medical under this plan.
To quote the Seven Corners website: ‘If you become ill with Coronavirus while traveling, your medical expenses can be covered. If you require an emergency medical evacuation and repatriation due to Coronavirus, this can be covered.’
But wait… Doesn’t my policy cover ‘cancellations’?
Most cancellations covered in your standard policy are already covered by the airlines themselves. This means that if the airline cancels the flight they would be the ones refunding. Usually, when they are not obligated to refund, neither would the travel insurance. The principal reason these policies are so popular are mainly for the medical and trip interruption coverage.
So even if your policy includes ‘cancellation’, this coverage is very limited. It almost certainly does NOT include a cancellation due to your worries of contracting the virus while on your trip – even if the CDC has issued a travel warning or alert!
If you cancel, you would be responsible for all nonrefundable costs, including any cancellation fees.
CFAR (Cancel For Any Reason) Coverage
In order to be covered for preemptive cancellations (meaning when you decide to cancel even though the airline has not), you need to have a special policy called ‘CFAR’ (Cancel For Any Reason).
As its name implies, you can decide to cancel for any reason under the sun and still be covered – and fear of traveling due to the Coronavirus would definitely qualify.
If you are considering a CFAR policy, here is what you need to know:
- The cost is between 40%-60% more than the base plan. (40% with Seven Corners)
- Reimbursement only covers between 50%-75% of the prepaid, non-refundable trip payments. (75% with Seven Corners)
- You are usually obligated to insure the entire nonrefundable portions of your trip, as opposed to just parts of the trip.
- Coverage must be purchased within 7-20 days of your initial trip deposit. (20 days with Seven Corners)
- You must cancel 2 days or more before your departure in order to be covered.
- CFAR is not available to New York or Florida residents.
What are Airline Waivers?
Sometimes, instead of straight out cancelling a flight the airline issues a ‘waiver’. This means an airline grants permission for travelers who have already purchased airfare to cancel voluntarily for a full refund, or change their travel plans for a different date. Each airline and each set of circumstances in unique. They are also very date specific, which means they usually apply to a certain range of dates. Standard travel insurance plans will probably not cover your other nonrefundable travel changes or cancellations caused by your itinerary changes due to airline waivers.
If you have any questions about waivers for your particular itinerary, call your airline or agent directly.
Does credit card travel insurance include CFAR?
Short answer: NO.
At best, travel insurance included in your credit card benefits will be only as good as a basic travel insurance plan. This means that any preemptive cancellations due to your concerns will not qualify as a covered loss.
To sum it all up:
If your trip is cancelled by the airline: When airlines cancel (or gives waiver) they typically refund the ticket, subject to their terms and conditions. Therefore, Travel Insurance would not apply since it’s not a ‘nonrefundable’ loss. However, you would be reimbursed in most instances for other covered nonrefundable trip related losses, such as cruises, hotels or missed connections.
If you are thinking of cancelling because of your fears: Unless you have CFAR, you are probably not covered at all. Unless your departure date is within the next week or two, your safest bet is to wait it out and see what happens.
The medical portion of the insurance is probably the most relevant coverage on a standard policy, but you need to find out from your carrier if Coronavirus related medical emergencies are included or excluded.
If excluded, it would then depend on when you purchased your plan for coverage in a particular region; depending on when/if the virus has been declared a ‘known event’ in that region.
Seven Corners does not exclude Known Events or Epidemics, and you would be covered for Coronavirus related medical under their plan.
I hope this article has answered your questions and given you some clarity. Although I have experience in travel insurance, I hope my humble knowledge is accurate. If you have any critical feedback, please reach out to me and let me know. I would love to hear from you!
Steve Weissman is the CAO of Regal Wings, and can be contacted at firstname.lastname@example.org