Will Travel Insurance Cover Your Coronavirus Cancellation?

So you booked a dream trip to Italy, which happens to have the largest outbreak of confirmed Covid-19 aka coronavirus cases outside of China. If you didn’t purchase travel insurance, you’re likely out of luck. But even if you did purchase travel insurance, can you cancel your trip citing “fear” of being infected during the trip?

Image Source: aarp.org

There are now confirmed Covid-19 cases on every continent except Antarctica. Companies like Amazon have instructed their employees to suspend all “nonessential travel.” An Amazon employee in Seattle has recently been confirmed to have Covid-19. Many other companies like Facebook and Google have canceled conferences.

The World Health Organization (WHO) has yet to declare the current coronavirus outbreak a global pandemic. Will the cancellations be covered by travel insurance if there is an official announcement of “pandemic” by some health agency or government body?

According to the website Insurance Business America, most travel insurance policies will NOT cover trip cancellations even if a “pandemic” is officially declared by, for example, the World Health Organization (WHO) or Centers for Disease Control (CDC).

Believe it or not, since all travel insurance providers now consider the outbreak an expected event, it is excluded from cancelation coverage. This is because in the insurance industry once an event becomes common knowledge, such as through government alerts and news reports, insurers consider it to have a foreseeable impact on travelers. And foreseeable impacts are  generally excluded by travel insurance policies! By even if the Covid-19 outbreak is officially declared a pandemic, it would not be covered by most travel insurance because by then the outbreak is already well-known worldwide.

Image Source: businessinsider.com

Only “cancel for any reason” or CFAR travel policies would cover trip cancellation for — you guessed it — any reason, including a rational or irrational fear of contracting Covid-19.

But what if you have a pre-existing condition that makes you especially susceptible to infection and becoming critically ill? If you can obtain a note from your doctor, it might be worth submitting that to your travel insurer and attempting to cancel.

It’s also not clear whether refunds would be issued if flights are forced to be canceled by a government. But since most airline tickets are sold as “nonrefundable,” it appears the airlines have the discretion to offer refunds or flight changes.

You can also try canceling directly with an airline or hotel, although most travel providers are only canceling if you’re booked to travel to regions with the most serious outbreaks, such as China, South Korea, Iran, and Italy.

If you cannot cancel directly with the travel provider and aren’t covered by travel insurance that will cover cancellation, consider trying to reschedule your trip to the future even if it means paying a change fee.

What can you do when booking future travel? Strongly consider paying extra for a “cancel for any reason” travel insurance policy. A “cancel for any reason” travel insurance add-on, also known as “CFAR” in the insurance industry, usually costs up to 40% more than a standard policy. But unlike most travel insurance policies, which contain long lists of exclusions, including epidemics and pandemics, a CFAR policy has no exclusions. You could even cancel if your astrological forecast recommends it.

However, a CFAR policy must usually be purchased within 14 to 21 days of the first trip booking and travelers must cancel their trip at least two or three days before their departure date. A CFAR policy will usually reimburse 75% of the trip cost, not 100%. If you have previously booked travel and purchased travel insurance, see if you can upgrade to a “cancel for any reason” policy.

What do you think? Are you going to cancel your travel plans or take advantage of the deep discounts caused by the Covid-19 outbreak?

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