Coronavirus, Avian Flu, SARS, and Travel Insurance

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

1. What happens if I have to cancel or interrupt my trip due to the threat of being exposed to the virus; and

2. What coverage do I have if I contract the virus?

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 being exposed 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 or interrupt their trip if they were quarantined.

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. However, check the plans exclusions for any that would exclude coverage an “Epidemic” as those plans probably would not provide coverage if it was declared an “Epidemic” by a recognized health authority.

There is one exception to the first question, the one about cancelling for fear of being exposed to the virus – “Cancel for any Reason”(CFAR) coverage that can reimburse cancelled trips up to 75%.  Some companies offer CFAR as an additional coverage that can be added which allows a traveler to cancel for any reason not covered by the basic policy but there are conditions that apply concerning when the policy has to be purchased and whether a traveler has to insure to value.

Will travel insurance companies expand their coverage to include “risk of exposure”?  I don’t know.  They have a very delicate balancing act in evaluating risk, widespread need, exposure to a single event that can cause catastrophic losses, and arriving at an appropriate premium.

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