Recently there have been several questions raised about travel insurance policies and how they would react to Swine Flu. They basically fall into two categories:
1. What happens if I have to cancel my trip due to the threat of swine flu?
The answer to this first question depends on the company and plan that you’ve used. Basic trip cancellation coverage is what is referred to as “named peril” coverage where only those perils that are listed by the insurance company and not limited by the company’s exclusions are covered. Most companies refer to these as “covered reasons”. Under the basic trip cancellation/interruption coverage there are no benefits if you cancel due to the threat of avian flu because the threat of sickness is not listed as a covered reason. Most policies include being “quarantined” as a covered reason and would provide coverage if one was forced to cancel their trip due to it however; some companies exclude an “Epidemic” and would not cover being “quarantined” if it was caused by an “Epidemic”.
Under the basic coverage benefits are limited or non-existent however, several companies offer an option that you can add to the basic coverage for Cancel for Any Reason. Generally this allows you to cancel your trip for any reason that is not otherwise covered. In order to qualify for this coverage you have to buy your insurance usually within two weeks after your first trip payment, you have to insure your trip for it’s full prepaid value, and if you cancel your trip for a reason that is not otherwise covered than you have to do so at least 2 days or more prior to departure. Cancel for any Reason also requires a co-payment of between 10 to 50 per cent of your trip cost depending on the plan that you’ve chosen.
2. What coverage do I have if I contract swine flu?
The answer to the second question is clearer. It now becomes a sickness and the client could be eligible for benefits under the medical expense, trip cancellation, trip interruption, travel delay, or emergency evacuation coverages found in most policies. Again the plans that exclude Epidemic would probably not provide coverage if it could be proved that it was the result of an Epidemic.
Most companies are discussing the issues concerning Swine Flu and how it could be handled. It is a delicate balancing act for the underwriters between the public need and the possibility of a single event causing of catastrophic losses. Will they respond and change their policies? We can only wait and see.