How carriers are covering travel insurance in the age of coronavirus

Carriers who offer travel insurance are taking different approaches to covering trip cancellations in the wake of the coronavirus (COVID-19) outbreak that claimed its first Canadian victim Monday.

Typically, travellers with regular trip cancellation insurance with trips booked before the federal government issues travel advisories are covered, depending on policy wording.

As of Monday, 69 cases of COVID-19 have been confirmed in Canada, mostly in Ontario and British Columbia. That day, B.C. also reported what is believed to be the first known death in Canada, when a man died at a seniors home in North Vancouver.

The anxiety surrounding coronavirus has led to many travel insurance questions from policyholders. One carrier said Jan. 29 that travellers who have yet to buy their insurance and book their trip to Mainland China as of Jan. 22 would not be covered, as the virus is a “known circumstance” to travellers. Another said Mar. 5 it would not be making specific exclusions to trip cancellation insurance related to coronavirus, even if Ottawa issues a coronavirus-related advisory to avoid non-essential travel to their destination after booking their trip.

TuGo said on its website that travellers may be covered when Global Affairs Canada or the Public Health Agency of Canada has issued a travel advisory which recommends to “avoid all travel” or “avoid non-essential travel” to the travel destination. The advisory must be issued after the trip was booked and after the policy was purchased. For trip cancellation, the advisory must still be in place at the time of scheduled departure.

Another travel insurance company, CAA-owned Orion Travel Insurance, said it will continue to cover existing trip cancellation policies. “For those who have purchased or are planning to purchase travel insurance through CAA, Orion Travel Insurance will continue to uphold the existing cancellation policy wording and exclusions,” Orion said in a press release Thursday. “This means if you have purchased regular trip cancellation insurance prior to a travel advisory to avoid non-essential or all travel is issued, for the destination you are travelling to, you will be eligible for reimbursement if you decide to cancel your trip.”

Tony Tsai, vice president of corporate communications and services with CAA Club Group, said Orion will not be making specific exclusions to trip cancellation insurance related to coronavirus. Travellers with regular trip cancellation insurance will be reimbursed “even if Ottawa issues a coronavirus-related advisory to avoid non-essential travel to their destination after booking their trip,” Tsai said.

“We are fully committed to keeping travellers safe and providing them peace of mind when they are insured by us, so introducing blanket exclusions would be counter to that,” he told Canadian Underwriter Monday. However, if a consumer decides to travel despite a travel advisory issued by Global Affairs Canada, they may not be covered by emergency medical insurance.

Tsai explained that consumers are entitled to the full non-refundable amount of their trip should they choose to cancel if a travel advisory to avoid non-essential or all travel is issued after purchasing trip cancellation insurance. Orion also offers cancel-for-any-reason coverage, which is included with any trip cancellation policy when purchased within 72 hours of booking a trip. With cancel-for-any-reason coverage, a customer can cancel their trip to a destination that does not have a travel advisory and receive up to 75% of the cost of the trip.

Related: Ins and outs of travel insurance amid coronavirus outbreak

Orion, which underwrites in Ontario, Alberta, Saskatchewan, Manitoba, Quebec and the Atlantic provicnes, said that it is seeing a lot of travel insurance questions from policyholders. “Many consumers are calling to understand how COVID-19 could impact their travel plans and what they are covered for if a travel advisory is issued,” Tsai said.

Allianz Global Assistance said on its website that it is “currently experiencing high call volumes, resulting in long wait times.” Last week, Allianz noted that “each travel insurance plan is unique, so remember to review your policy in detail to understand the benefits and exclusions that may be applicable to you based on your coverage and travel plans. In all scenarios, claims payment is subject to all policy terms and conditions being met.”

Even though it may not help after the fact, has Orion seen an uptake in people wanting to purchase travel insurance?

“We have seen an increase in the purchase of travel insurance,” Tsai reported. “With our trip cancellation and travel medical insurance, the exclusion is for destinations currently under avoid all-essential or all travel. Travellers who have booked for other destinations are certainly more interested in purchasing travel insurance to protect their investment and health and safety if they decide to continue with their trips.”

A report from Rates.ca last week reported that only 40% of Canadians who travel outside the country purchase travel insurance for their trip. Residents of B.C. are the most likely to buy travel insurance (65%), followed by Quebec (42%).