Pandemic underscores the value of Cancel for Any Reason travel insurance
Seven Corners is advising customers to stay safe at home and consider postponing travel until later in the year.
With travel bans and many countries closing their borders to outside visitors, the coronavirus outbreak has shaken up the travel industry — and forced travel insurance companies to review or reinforce their policies.
Indiana-based company Seven Corners has advised its customers that traveling is not a safe option right now, regardless of the destination.
The insurer has seen an influx of customers postponing their upcoming travel and asking about the best travel insurance to buy for future trips.
Seven Corners president Jeremy Murchland thinks the coronavirus will cause people to be more vigilant about purchasing travel insurance.
“The coronavirus will inevitably change travelers’ thinking in terms of purchasing travel insurance in the future,” Murchland told Finder.
“Because many people have lost their trip investments recently, I think they will be more likely to buy travel insurance and protect their trip expenses in the future,” he said.
Standard travel insurance policies exclude pandemics like the coronavirus under its “named perils.” This means they won’t reimburse travelers who want to cancel their trips because they’re scared to travel or contract the virus.
The case for Cancel for Any Reason (CFAR) coverage
For this reason, Murchland suggests all travelers add CFAR coverage to their policies.
“We still recommend that people add CFAR to their travel insurance to protect their nonrefundable trip costs, even after this pandemic ends, so they cancel their trip for any reason they wish,” he told Finder.
The coverage can increase the cost of a policy by up to 50%, and it typically reimburses travelers for 50% to 75% of their prepaid trip costs. It’s usually a mix of cash and travel credits.
If your policy has a pandemic exclusion, CFAR coverage is the best way to recoup your costs if you can’t travel due to the coronavirus.
“This is different from canceling for a covered reason stated in the plan, as canceling for a covered reason would result in a full reimbursement of prepaid nonrefundable trip expenses,” Murchland explained.
When CFAR coverage comes into play
In the context of COVID-19, CFAR coverage applies if the customer purchased a policy before the pandemic became a “known event” — and most travel insurers declared it one between January 22nd and January 24th.
According to Murchland, the coverage has held up well.
“If customers purchased CFAR within the required timeframe (that’s typically within 15 to 20 days of their first trip payment or deposit), they’ve received refunds for 75% of their nonrefundable trip expenses,” he said.
“CFAR does increase the plan cost, and customers must cancel their trips at least two days before the scheduled departure and insure all nonrefundable prepaid trip expenses.”
Photo credit: Seven Corners