The coronavirus proves why it’s important to read the fine print of your travel insurance policy
Standard policies won’t cover those who are worried about traveling to Asia — but there are some exceptions.
People who have purchased travel insurance are learning they may not be compensated for canceling their trip to Asia.
The World Health Organization (WHO) declared the coronavirus outbreak a global health emergency on January 30. And as of February 5, WHO confirmed 24,554 cases of coronavirus and 491 deaths — most of them in China.
Though the Centers for Disease Control and Prevention (CDC) advises against travel to China and airlines, cruise and tour companies are canceling trips to the country, standard travel insurance policies don’t cover the costs of canceling planned travel to the region for fear of contracting the deadly virus.
Epidemics and pandemics like the coronavirus are typically excluded under a policy’s “named perils.”
“I haven’t read the wording of every policy of every provider in every country in the world, so I can’t say for sure, but I very much doubt any provider would specifically include epidemic as a covered reason,” Phil Sylvester, Head of PR and Media Communications for World Nomads, told Finder.
“What providers tend to do is list things they believe will expose them to high levels of risk and exclude them from cover. You’ll usually find these in a section of the policy titled ‘general exclusions.’ That means they apply generally regardless and override anything else in the wording,” Sylvester explained.
There is one exception.
“Cancel For Any Reason” (CFAR) coverage can reimburse travelers who want to change or cancel their trip because they’re scared to travel. But it can add 50% to the price of a basic policy, Jagruti Khatri, Executive Vice President of Insubuy, told Finder.
The rate can climb even more for older travelers and those in poor health.
CFAR coverage has other limitations, too. It must be purchased within 10 to 21 days of your initial trip deposit, and it can’t be added later, according to Khatri. It typically only reimburses travelers for 50% to 75% of their prepaid trip costs, and it’s often a mix of cash and travel credits. Finally, CFAR is not available to residents of New York.
“Even though the chances of contracting the virus are quite low, it’s up to each individual to assess their own appetite for risk. In that assessment, you should consider the financial consequences of your decision,” said Sylvester.
What happens if your airline cancels your flight to China?
Whether or not you’ll be reimbursed depends on your travel insurance company.
“Some providers may offer trip cancelation coverage for an airline shutdown, if the shutdown causes the traveler to miss 50% or more of their scheduled trip,” Stan Sandberg, co-founder of TravelInsurance.com, told Finder.
“However, that covered reason is typically found in more premium plans, and still might not provide coverage in this scenario. It’s important that consumers speak directly with their travel insurance provider to find out what coverage is and is not available,” Sandberg said.
Does your policy apply if you get sick on your trip to China?
If you purchased a standard travel insurance policy after the coronavirus was declared a known event on January 22, you probably won’t be covered for any losses.
“If ‘epidemic’ is not in the general exclusions [of your policy], it does not mean it is covered. There may be other clauses which apply,” Sylvester explained.
“For example, once a risk becomes ‘known,’ you cannot buy cover for it — in the same way you can’t buy car insurance after you’ve crashed your car,” Sylvester said.
But if you bought your policy before the event was predicted, you might be covered if you travel to Asia and fall ill on your trip. In this case, your plan will likely pay for medical expenses and care.
Advice for travelers who are already in China
If you’re already in China, check to see if your travel insurance includes non-medical evacuation coverage. This kicks in when the US State Department requires mandatory evacuation of US residents in an affected area — like it did on January 29 in Wuhan, China, the epicenter of the coronavirus outbreak.
If you have this coverage, you may be able to claim compensation for the evacuation up to the limits on your plan. But you may not be so lucky.
“If a traveler is already in China and has a travel insurance plan with a non-medical evacuation benefit, they may have coverage based on the government-imposed travel ban. However, some plans will have specific exclusions for an epidemic or pandemic,” Sandberg told Finder.
“It’s also important to note that practically speaking, if a traveler is stuck in a quarantine zone, travel insurance evacuation coverage won’t be able to get them out before the quarantine is lifted,” said Sandberg.
In a nutshell, it comes down to your provider and the “specific wording of your policy,” said Sylvester — which is why it’s important to read your policy documents carefully.
For example, Insubuy confirmed its non-emergency medical evacuation rider doesn’t apply to the coronavirus.
What to do if you haven’t bought travel insurance yet
If you’re planning a trip to China but haven’t purchased a policy, your best bet is to add a CFAR rider to your coverage or go with a provider that doesn’t list epidemics among its exclusions.
The World Nomads policy issued to US residents doesn’t have an exclusion for pandemics or epidemics, according to Sylvester. “However, there are limits on the who’s and what’s that can be covered,” Sylvester said.
For example, quarantine benefits only apply if the traveler or their companions are the ones quarantined.
“It doesn’t extend to services that are canceled or locations that the traveler cannot reach due to quarantine (i.e. I wasn’t part of the quarantine but I couldn’t leave because the airport was quarantined),” explained Sylvester.
If you haven’t bought travel insurance and want to cancel an upcoming trip to China, you might be able to get some of your airfare money back.
American Airlines is allowing some customers to change or cancel their flights to China until the end of February with no penalty, while United Airlines is offering full refunds for unflown flights to Wuhan — even if you have a nonrefundable ticket.