This story was written by consumer advocate Christopher Elliott and originally appeared in Forbes.
Travel insurance does not cover everything. If you didn’t know that before the pandemic, you probably do now. Most policies exclude pandemics or fear of travel, which renders them all but useless to travelers on the road after the coronavirus outbreak.
Consider what happened to Rita McMahon. She’d booked a flight from Seattle to Manchester, England, this summer. And then the coronavirus struck.
Although her Aer Lingus flight is still operating, there’s a quarantine for people arriving from the U.S. McMahon is reluctant to fly. But neither her airline nor her travel insurance company will refund the $5,075 she spent for her first-class ticket.
“It was supposed to be a trip of a lifetime for me,” says McMahon, who lives in Kirkland, Wash. “Now, it is turning into something else.”
At a time like this, it’s more important than ever to understand what travel insurance does — and does not — cover. Travel insurance is in high demand, and companies are adding new types of coverage to meet that demand. Experts say there’s only one way to guarantee you’re covered by insurance, even as policies continue to evolve.
This is what travel insurance does not cover
Here’s a short list of the things you might assume travel insurance covers, but doesn’t:
Fear of travel. If you decide not to travel, your insurance policy won’t cover you. Fear of contracting COVID-19, or any other illness, isn’t covered.
A second COVID-19 surge. If the area you’re planning to visit gets shut down by coronavirus, don’t look to your travel insurance company for coverage.
Ignoring government travel warnings. Even if you’re covered, your policy may be voided if you travel somewhere that the State Department has deemed unsafe.
A pre-existing medical condition. Most travel insurance won’t cover you for a condition you have before your trip. (You can get a pre-existing conditions waiver to cover some conditions.)
Losses related to a mental disorder. If your fear of flying returns after the coronavirus outbreak and the civil unrest at your destination, your travel insurance policy won’t help you. Psychiatric conditions aren’t covered.
Why doesn’t insurance cover these items?
“Travel insurance companies make money by banking on the fact that the policies they sell won’t be used,” says Sean Messier, a credit industry analyst at Credit Card Insider. “So if extremely widespread issues like the COVID-19 pandemic aren’t excluded in insurance policies, that dramatically increases the likelihood that customers will have a reason to file a claim, potentially cutting deep into insurance company profits.”
Since the coronavirus outbreak, my nonprofit consumer advocacy organization has received thousands of cases from unhappy policyholders. Sometimes, the insurance companies don’t even bother to respond to the claim.
For example, when Donald Faulhaber had to cancel his Frontier Airlines flights after the coronavirus outbreak, he contacted his travel insurance company for a refund.
“I haven’t had a reply since I filed a claim,” says Faulhaber, a mortician from Broadview Heights, Ohio.
Travel insurance is more important than ever
Still, travel insurance is more important than ever, according to a recent survey by Temple University. Its research found that 58% of respondents agree that after the coronavirus outbreak, insurance is “more necessary.” Roughly the same number of respondents have a more favorable attitude toward travel insurance.
“Clearly, American travelers are taking travel insurance more seriously these days,” says Xiang Li, director of Temple University’s U.S.-Asia Center for Tourism & Hospitality Research, which conducted the research. “They demand safe and protected mobility. Given what we have been through in the past couple of months, the results do not come as a surprise.”
Insurance companies are scrambling to meet demand for coronavirus coverage. For example, VisitorsCoverage just announced it would cover public emergency health screenings in its new CoverAmerica Gold policy by IMG. Rajeev Shrivastava, CEO of VisitorsCoverage, says some companies are simply rewriting their policies instead of adding new coverage.
“The most important thing that travelers should know about travel insurance is that not all policies are the same,” he adds. “On the surface, they may all sound the same, but benefits and exclusions may vary.”
Essential strategies for getting travel insurance that covers you
Find out if you’re already covered. Christian Nielsen, chief legal officer for Airhelp, says you may be tempted to buy travel insurance now. But he says you may already have coverage. “If you are considering getting travel insurance, check your credit card plan first,” says Nielsen. “Sometimes, travel insurance is already included if you pay for your flight ticket using your card.”
Take advantage of the “free look” period. Travel insurance allows you to buy and cancel within a certain amount of time. For example, every product Allianz Travel offers includes a 15-day “free look” period during which travelers can review their policy. “If they then decide during the free look period that the product doesn’t meet their needs, they can purchase a new product or cancel their policy for a full refund,” says Allianz spokesman Daniel Durazo.
Mind the fine print. That’s what PK Rao, president of INF Visitor Care, advises. “Amid the COVID-19 outbreak, we’re seeing a few providers add protections to their current programs, with a view toward future pandemics,” he says. “Most travel insurance will not cover cancellations for stay-at-home orders. Only mandatory, enforced isolation would be covered for cancellation. These nuances in coverage are important to understand before enrolling.”
What does travel insurance cover after COVID-19?
Here’s what travel insurance still covers after the coronavirus outbreak:
Baggage. Provides reimbursement for lost, stolen, or damaged baggage or personal items.
Employment layoff. Offers reimbursement for prepaid, nonrefundable trip payments and deposits if you have to cancel a trip because of an involuntary layoff or termination of employment.
Financial default. In the event of a complete cessation of operations due to financial circumstances, this coverage kicks in.
Missed connection. Covers you for a missed flight connection, or for the additional costs to “catch up” to a cruise if the cause of delay is an accident or bad weather, travel insurance covers you.
Travel delay. Provides reimbursement for meals and accommodations when a trip is unexpectedly delayed for more than a specified minimum time.
Trip cancellation. Reimburses you for nonrefundable trip payments and deposits if a trip is canceled for illness, injury, death, or other specific reasons, or if your destination is uninhabitable.
Trip interruption. Covers you for nonrefundable trip payments and deposits if a trip is interrupted by illness, injury, death, or other specific reasons.
“Trip interruption is one of the often-overlooked benefits in any travel insurance plan,” says Sherry Sutton, the vice president of marketing at Travel Insured International. “It means something went wrong and you are about to face unexpected expenses, like airfare to get home and the unused portion of your trip that you paid for. Many plans offer payment up to 150% of the original trip cost.”
You can still get travel insurance that covers you
You can still get coverage that will work, but it’ll cost you. A “cancel for any reason” travel insurance policy covers you regardless of the reason for your cancellation.
“Adding ‘cancel for any reason’ to your coverage plan is always a good idea and is a great way for travelers to protect their future trips,” says Jeremy Murchland, president of Seven Corners.
But there’s a catch: It costs between 10% and 12% of the price of your vacation — almost double what a regular “named perils” policy costs — and only reimburses you 75% of the cost of your trip. Also, it’s hard to find.
“As the COVID-19 situation has ramped up, many travel insurance companies have stopped offering cancel for any reason policies,” says Erik Josowitz, an analyst at InsuranceQuotes.com.
“But not all. Certain insurers still offer this option. But it’s important to read the policy carefully and make sure infectious diseases are not excluded.”
I reviewed the ways travel insurance has changed in a recent FORBES story. At the time, many travel insurance companies had stopped selling policies. They also imposed new limits on future policies and added new restrictions to “cancel for any reason” insurance. Since then, travel insurance companies have started to sell new policies again — but the restrictions remain in place.
What’s next for travel insurance?
The travel insurance industry is evolving quickly. So this list of what travel insurance does not cover could soon change, say experts like Kasara Barto, a spokeswoman for Squaremouth.com.
“Travel insurance is designed to cover travelers’ most common concerns,” she explains. “But prior to January 2020, pandemics and viruses were not top of mind for travelers.”
Barto says coverage for viral outbreaks may become more in demand as the summer travel season unfolds.
“Providers are developing policies that will offer more coverage for some of the impacts of a future pandemic, such as travel warnings and CDC alerts,” she says.
What those policies look like — and what they will cover — is anyone’s guess.
Christopher Elliott’s latest book is “How To Be The World’s Smartest Traveler” (National Geographic). This column originally appeared in Forbes.
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