Avian Flu, SARS, and Travel Insurance

Recently there have been several questions raised about current travel insurance policies and how they would react to Avian Flu. The actual questions about avian flu are very similar to the questions that were raised in the past few years relating to SARS. They basically fall into two categories:

1. What happens if I have to cancel my trip due to the threat of avian flu; and

2. What coverage do I have if I contract avian flu?

The answer to the first question depends on the company and plan that you’ve used. Trip cancellation coverage is usually a “named peril” coverage where only those perils that are listed by the insurance company and not limited by the company’s exclusions are covered. Basically there is no coverage if you cancel due to the threat of avian flu because none of the policies currently have that as a named peril. However, most policies include the peril of “quarantined” and would provide coverage if one was forced to cancel their trip due to it. There is only one company(Access America) whose plans exclude “Epidemic” and would not cover being “quarantined” if it was due to one.

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”.

There is one exception to the above. One company, TravelSafe, within the past month, announced a new program where in addition to their named peril cover they are also offering policy enhancements that include a “cancel for any reason” coverage where they will provide 75% or 90% reimbursement if a client has to cancel their trip due to a non-peril. These new benefits are only available if a client buys their insurance within 15 days of their intial trip payment and they insure to the full pre-paid value of their trip.

Most companies are discussing the issues concerning Avian Flu and how it could be handled. It becomes 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 like they did to “terrorism”? We can only wait and see. I would expect that they will and in a similar manner where coverage only exists if the event takes place in a city that is on your itinerary within 30 days of your trip departure.

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