The pandemic changed everything, when it comes to travel insurance. Rules were rewritten. Conventional wisdom was turned on its head. It’s a whole new world out there. And now there are travel insurance tips even the pros may not know.
What if you don’t follow the new rules? That could be an expensive mistake. Since the early days of the first COVID-19 outbreak, travelers have flooded the helpline of my nonprofit consumer advocacy site with requests for refunds. Travel insurance — if they had it — didn’t always offer protection against pandemic-related travel losses.
“Several travel insurance companies have added exclusions for COVID-19,” says Dan Skilken, president of Tripinsurance.com. “There really is no good reason for them doing this. So I would make sure if you are buying a plan for a future trip without this exclusion. The plan should cover you if you get sick and cannot travel, or you get sick during your trip from COVID-19.”
This is how much the rules have changed
After the outbreak began, only half of those who paid for a trip or event got a future credit, such as a voucher for a flight or hotel stay, according to a recent survey of consumers. An unfortunate 15% reported they did not receive a refund or credit for their travel loss. That includes some travelers who thought travel insurance covered them.
Travel insurance companies have begun warning prospective customers about the limitations of their coverage.
For example, Allianz Travel Insurance now displays a large banner across its front page, noting: “Our travel protection plans generally do not cover losses related to COVID-19.” Generali Travel Insurance warns: “Our plans will not cover fear of travel.” And Arch RoamRight notes, “There are no benefits under the policy for shelter in place or stay at home orders issued as they are not considered quarantines as defined by the CDC or the Code of Federal Regulations.”
The top travel insurance tips even the pros may not know
Don’t make these expensive travel insurance errors:
- Get enough coverage. Now more than ever.
- Buy the right kind of coverage.
- Ask the right questions.
- Pay attention to the fine print.
- Buy from the right place.
- Consider “cancel for any reason” insurance.
- Heed the pandemic exclusions.
- Don’t assume you know everything about travel insurance.
Travel insurance tip #1: Get enough coverage.
Travelers need to make sure that they are purchasing the right coverage for their circumstances, says Kasara Barto, a spokeswoman for the travel insurance site Squaremouth.com. “While many of the impacts of the outbreak were not covered by travel insurance, some policies are still offering cancellation and medical benefits for certain situations,” she says.
These policies, she notes, may offer coverage for some of travelers’ top coronavirus concerns. Among them: cancellation for medical, economic, and employment reasons.
Travel insurance tip #2: Get the right kind of travel insurance.
Beware of trip “protection,” which isn’t insurance, according to Terry Boynton, co-founder and president of Yonder. “Travel insurance is an actual insurance product backed up by large underwriting companies and state regulation,” he says. “Trip protection isn’t as secure and might only reimburse you in the form of a future travel credit, not cash, if you had to cancel your trip.”
Also, keep in mind that most travel insurance policies will not cover cancellation because of government restrictions. And they won’t cover a cancellation because you’re afraid to travel. Laura Heidt, the client insurance desk manager at Brownell Travel, notes that the medical component will typically cover treatment at a nearby hospital if you get sick while traveling.
“While no coverage will transport you home while you’re infected with COVID-19,” she adds, “if you experience long term complications, or a different illness or accident lands you in the hospital, medical transport coverage like Medjet can make sure you are able to get to a hospital at home.”
Travel insurance tip #3: Ask the right questions.
People assume they’re covered when, in fact, they are not. Ask questions before you make that mistake, say pros.
“Travelers tend to make the mistake of not reading the plan document ahead of time or taking the time to ask questions before buying to understand what is and is not covered,” says Jeremy Murchland, president of Seven Corners. “Even after this outbreak, people may be confused about the fact that fear of contracting an illness isn’t covered.”
Travel insurance tip #4: Pay attention to the fine print.
Not all travel insurance is equal. Some cheaper policies have significant exclusions that may make them worthless in a post-coronavirus world, says Erin Fish, co-founder of the site goWanderwell.com.
“Some examples of the limitations and exclusions often seen in these plans can be: low medical benefit maximums, medical benefits limited to emergencies only, no coverage for pre-existing conditions, no coverage for cancellation or interruption due to bankruptcy or default of your travel supplier,” says Fish.
Steve Dasseos, the head trip insurance guru for TripInsuranceStore.com, has another fine-print gotcha: “Don’t assume that all companies define the terms the same,” he says. For example, what date will count as your initial trip deposit date? It depends on the insurance company.
Travel insurance tip #5: Buying travel insurance from the right place.
Michael Bonebright, a consumer analyst with DealNews.com, warns against buying insurance policies sold by a third party in a post-pandemic travel world. “Most people get travel insurance as an add-on from a travel site like Expedia or Hotels.com,” he says. “However, if you need to make a claim, you have to contact the insurer itself — not the travel site.”
Going directly to a reputable travel insurance company is also a good option. But do your homework, advises Dan Durazo, a spokesman for Allianz Travel Insurance.
“It’s important to know if the company is offering its own products or just marketing products from other companies, whether they manage their own claims process, whether they have 24/7 customer service and whether they have an in house travel assistance team that is available 24/7 to help with travel emergencies big and small, including medical emergencies and evacuations,” he says.
Travel insurance tip #6: Consider”cancel for any reason” insurance.
Travelers tend to focus on the least expensive kind of insurance. But in a post-pandemic world, cheap may get you into trouble, experts warn.
“It’s important to note that fear of travel, travel advisories and destinations being inaccessible due to the coronavirus are not covered reasons for trip cancellation and interruption,” says Christine Buggy, vice president of marketing at Travelex Insurance Services. If you want the flexibility of being able to cancel for fear of an outbreak, consider a “cancel for any reason” policy.
“This upgrade allows a traveler to cancel a trip for any reason according to the terms of their plan,” she says.
In addition to refunding a percentage of your trip, “cancel for any reason” could also cover 100% of trip costs for issues like sickness, injury, or family tragedy, notes Jonathan Breeze, CEO of AardvarkCompare, a travel insurance comparison site. His company currently offers six “cancel for any reason” plans from four insurance companies.
Travel insurance tip #7: Don’t ignore the pandemic exclusion.
A lot of travel insurance policies have exclusions for epidemics and pandemics. That means if there’s a second COVID-19 outbreak, and you’re on a trip, your coverage may be limited — or nonexistent.
Travel insurance tip #8. Don’t assume you know everything about travel insurance.
“I think there are going to be many changes in travel insurance going forward,” says Robert Goldstein, a luxury travel advisor at Ovation Travel Group. “I’m sure the insurance companies are in the process of reevaluating the terms and conditions for travel insurance.”
In other words, by the time you read this, the rules might have changed again.
And remember, even the best travel insurance policies don’t cover everything. Take the legal aspect of traveling, for example. Legal prohibitions against traveling stranded hundreds of thousands of travelers after the COVID-19 outbreak.
“Traditionally, international insurance and assistance plans offer a light version of legal assistance — usually limited to transit related issues — but do not assist on urgent and unforeseen legal events, such as regulations in the COVID-19 era,” says Alex Thompson, CEO of Legaroo.com, a legal assistance provider.
Going forward, travelers should consider plans that include a local legal point of contact. That person would assist by avoiding language barriers and navigating the legal environment.
Wait, there’s more!
This is by no means an exhaustive list of errors you could make when buying travel insurance. There are other mistakes, which I outlined in a previous story. But in a new world of travel, you have to protect your next trip against a possible pandemic. These strategies can help.
“You have to look at the big picture,” says Jeff Rose, a financial planner with Good Financial Cents. “Give some thought to the idea of travel insurance before you begin planning your trip.”
Seeing the big picture is more important than ever in a world where the next pandemic could shut down travel and take your next vacation or business trip with it.