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Does travel insurance cover coronavirus (Covid-19)?


Does travel insurance cover coronavirus?

Updated 17 June 2020

Coronavirus continues to spread in many countries; particularly the US, UK and Brazil. Many Australians have been forced to cancel their international travel plans or are reconsidering travel at some point in the future; either late 2020 or into 2021 and even 2022.

We continue to have people contacting us seeking advice about whether their travel insurance policies will refund the cost of their trip if they decide, or are forced, to cancel their travel plans.

The Australian Federal Government currently has a “do not travel” to most international destinations unless absolutely necessary.

Will my travel insurance cover coronavirus?

The answer depends on the policy wording which is in place, and the level of the cover which a person has purchased.

Some travel insurance cover is for medical expenses only while other policies cover trip cancellation and other associated expenses. You will need to check what type of travel insurance cover you have by looking at your insurance policy, policy schedule, or other correspondence between yourself and your travel agent or insurer, or by contacting your insurer directly.

What does a “cancel for any reason” policy cover?

We recently checked a travel insurance policy for some clients. The type of policy purchased prior to their holiday to Europe was described as a “cancel for any reason” travel insurance policy.

“Cancel for any reason” is a common name given to travel insurance products, however, the name can be deceiving. In the case of this particular policy, there were still some exclusions on claims relating to cancelled travel.

Relevantly, the policy includes the following exclusion:

We will not pay for claims caused by:

An epidemic, pandemic or outbreak of an infectious disease or any derivative or mutation of such viruses (or arising directly or indirectly from these) or the threat or perceived threat of any of these.

Epidemic means a:

Fast-spreading contagious or infectious disease or illness in an area as documented by a recognised public health authority.

Pandemic is defined as:

An Epidemic that is expected to affect an unusually large number of people or involves an extensive geographic area.

Based on the above definitions, it’s likely that claims for cancellation costs, where you have cancelled your trip due to an epidemic or a perceived threat of an epidemic, will not be covered under the policy. Importantly, the above exclusion does not appear to apply to claims payable under the policy for emergency overseas medical care.

Is the term “cancel for any reason” misleading?

However, it might be said that advertising the policy as a “cancel for any reason” policy, could mislead consumers as to the effect of the policy which they’ve bought.

In such circumstances, a consumer may be able to challenge the decision of the insurer to decline the claim through the Australian Financial Complaints Authority (AFCA).  AFCA has powers in considering a dispute, to look at the relevant legal principles, industry codes or guidance, previous AFCA (or FOS) determinations and importantly what constitutes “good industry practice”.

What if my policy does cover epidemics and pandemics?

Other policies have similar definitions, but not all travel insurance policies contain such exclusions and advice should be sought in each case.

We have reviewed a number of different policies and found that even those policies that do not exclude and specifically cover pandemics or epidemics are limited in the coverage that they provide.

For example, one of these policies provides cover for:

Being unable to travel because of travel restrictions imposed on you after an epidemic, terrorist attack or natural disaster.

If you are covered under and sought to claim on this policy, your claim for cancellation or amendment fees may only be successful if you were restricted from travelling to your destination. Alternatively, if you are free to attend your destination but decided not to do so because of a desire to avoid becoming infected, it is arguable that no payment will be made.

Yet another policy specifies that it will cover you in the event of a human pandemic, epidemic or infectious disease outbreak but only if your certificate of insurance was issued before an alert or warning was made regarding any outbreak or possible outbreak.

In relation to the coronavirus, it is unclear precisely when the first relevant alert or warning would have been made given that the early stages of the disease outbreak was relatively confined to one province of China.

Get help

If you are unsure whether your travel insurance policy covers travel cancellation due to coronavirus, but you have decided to cancel your travel to avoid exposure to the virus anyway, we recommend that you still make a claim.

If the insurance claim is rejected, you can contact us and will review the rejection for free and give you advice on any possible appeals or next steps.

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