With travel insurance already being complicated by factors such as legal jargon and confusing conditions, the coronavirus pandemic has only made this important area of insurance even more convoluted. Combining this with the specific health rules and regulations of each region and country, travelers will experience many misconceptions about the degree to which their travel insurance policies can financially protect them. With this in mind, it is crucial for both travelers and travel advisors to be up to date with the ways that travel insurance is constantly evolving during these uncertain times. Below you will find helpful information on what COVID-19 has and hasn’t changed about travel insurance.
How COVID-19 has changed travel insurance:
1. Travel insurance companies are becoming more honest about their products exclusions
Prior to the coronavirus pandemic, travel insurance providers were hesitant about discussing what they did not cover. This was because by emphasizing what they did cover and brushing over their exclusions, it was more likely for them to secure steady business. As of now, since the travel insurance industry has faced countless coronavirus claims in the recent months, many providers have begun to stress the fact that they do not cover claims that arise due to the pandemic. This is significant because it has been historically rare for any travel insurance company to advertise what they exclude from their coverage plans.
2. Most travel insurance providers have stopped selling new policies
As a result of the pandemic, many travel insurance companies have stopped writing and advertising new insurance policies to their customers. Although there are a variety of factors that have contributed to this, it is mostly due to the shortage of people currently travelling and the financial consequences imposed by COVID-19. Experts have projected that the selling of new coverage plans will continue after the outbreak comes to an end. However, it is important to note that coverage will significantly change as underwriters make a considerable effort to mitigate the risk associated with future travel insurance plans.
3. New travel insurance policies are more restrictive in nature
For providers that have chosen to continue writing new policies, their future coverages are associated with restrictions helping them avoid any claims related to the coronavirus. Insurance companies have deemed this as a reasonable action to take since the spread and effects of COVID-19 should now be common knowledge within the general population. According to most providers, this makes any coronavirus claim void as it should be considered a foreseen, avoidable event. A specific example of a restriction that many insurance companies have imposed is that they will not provide medical coverage when visiting locations that have at least a Level 3 travel advisory warning. To provide context, a Level 3 advisory warning advises people to avoid non-essential travel at all costs.
4. Paid coverage that can be cancelled for any reason is coming to an end
“Cancel for any reason” insurance that allows you to cancel a trip for any reason while receiving a partial refund is adopting tighter restrictions during the pandemic. Some examples of the new measures associated with the popular form of travel insurance include that it must be purchased at time of the initial trip deposit and that compensation will be less than previous Cancel Anytime products. However, as of now, insurance underwriters are leaning towards the complete stoppage of writing policies that consist of Cancel Anytime coverage. This is evident with major insurance companies such as Quotewright Insurance and Travelex deciding to suspend sales of their “Cancel for any reason” coverage.
What hasn’t changed about travel insurance during the COVID-19 pandemic:
For the most part, the majority of insurance companies continue to provide coverage for the following:
1. Trip cancellation
Insurance companies will still reimburse you for non-refundable trip expenses if your vacation is cancelled for injury, illness, death, or if the destination is uninhabitable.
2. Missed travel connection points
If you miss a flight connection or incur additional costs to catch up to a cruise due to unforeseen events such as bad weather, most travel insurance companies will cover you.
3. Travel delay
Similar to the previous point, travellers will be eligible for reimbursement for accommodations and food when there is an unexpected delay for their trip.
Insurance companies will still provide you with compensation for baggage or personal items that are stolen, damaged, or lost.
5. Loss of employment
The majority of insurance providers will continue to offer you reimbursement for trip payments that are non-refundable if you are forced to cancel due to involuntary layoff or termination of employment.
What the future of travel insurance looks like
All things considered, although some travel insurance companies may charge substantial fees for COVID-19 coverage, experts have predicted that most insurance policies will exclude coverage related to the virus. However, as long as you carefully read the policies it is definitely worth investing in travel insurance if you want to financially protect yourself. That being said, be sure to closely monitor the changing policies of the travel insurance industry in order to ensure that you are covered on your next vacation.
For more information on the travel industry and how it is currently impacted by COVID-19 please visit https://www.alltraveladvisors.com