What You Need to Know About Travel Insurance and Coronavirus (COVID-19)

Mar 4, 2020

The spread of the latest coronavirus has alarmed families, doctors, politicians, and, of course, travelers. To date, the Centers for Disease Control and Prevention has warned against nonessential travel to China, Iran, South Korea and Italy—and for senior or at-risk travelers, Japan.

When the virus spread to Lombardy—the epicenter of the Italian outbreak—and the U.S. Department of State responded with a level-three travel advisory (on a scale of one to four), panicked travelers began looking for insurance that would cover them in the event of cancellations: “Our calls spiked 400 percent in one week,” says Kasara Barto, spokeswoman for the online travel insurance comparison website Squaremouth.com

So what can insurance do for you in the face of COVID-19? Read on to find out.

But first, what exactly is travel insurance?

It generally covers two things: pre-departure trip cancellation and post-departure trip interruption, according to Stan Sandberg, co-founder of comparison website TravelInsurance.com.  

Trip cancellation covers you in the event of unforeseeable circumstances—illness, severe weather, natural disasters and the like. A policy would refund any nonrefundable payments you've already made.

Trip interruption protects against anything that can go wrong once you've departed—for starters, a medical emergency, trip delay or baggage loss. In this case, the policy would cover the unused, nonrefundable portion of your trip (if you canceled).

In most standard policies—which typically cost between four and 10 percent of total trip price—cancellation and interruption also include some level of medical coverage. 

Can you buy a policy that covers cancellation in case of a viral outbreak?

Fear of disease (or anything else) isn't covered by standard trip cancellation insurance.

Still, if you’re afraid an outbreak may occur wherever you're headed, and you’d like to be able to back out, you can buy a cancel for any reason (CFAR) policy. This allows you to change your mind up to two or three days before the trip and recoup 50 to 75 percent of the cost of your trip—but bear in mind that CFAR generally costs 50 to 60 percent more than standard insurance. Not every insurer offers the upgrade, but Squaremouth has a filter that allows new buyers to search for policies that do.

There are other important caveats with CFAR, too: You usually have to buy it within one to three weeks of your original trip reservation (you can buy standard travel insurance right up until the day of your departure). And with CFAR, you have to insure 100 percent of your trip cost (standard insurance is more flexible on that front, too). 

Last—sorry, New Yorkers—CFAR is illegal in the Empire State.

Can you get travel insurance that covers you in case you contract coronavirus on the road?

Possibly.

Some insurers have deemed January 21 the date that the coronavirus became a “known risk,” and many don’t insure against known risks. (A meteorological analogy: You can buy travel insurance while a storm is brewing, but generally not once a hurricane is named.) 

If your insurer considers COVID-19 a known risk, then your policy won’t kick in—even on the medical side—if you contract the virus on the road. Pre-departure illness would be another story though, and you might still be covered by trip cancellation insurance.

“If you’re traveling to a destination has a known outbreak, you should call an agent with the travel insurance company to confirm if it would be excluded or not,” says Sandberg.

And if you intend to travel to a country that has no known coronavirus cases, you may still be protected by medical coverage, though some insurers have an exclusion clause for pandemics or epidemics.

Others such as World Nomads, which specializes in adventure travel, don't have the exclusion clause for epidemics and pandemics. I priced insurance for a weeklong spring trip to Switzerland at roughly $72 or $118 (the former covers an emergency evacuation of $300,000 and trip interruption of $2,500; the latter, a $500,000 evacuation and $10,000 interruption; and both cover emergency medical expenses up to $100,000).

Can you protect yourself from buying the wrong plan?

Yes. While travel insurers encourage early policy buying, the industry also allows a 10-day look-back period in which you may cancel, get a refund and find another plan.

“Coronavirus is somewhat uncharted territory,” says Sandberg. But it isn't necessarily the undoing of your spring or summer travel plans. With some shopping around—and the all-important double-checking of policy details over the phone—you could well have yourself covered. 

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