Updated 3 July 2023
Whilst Government lockdowns and other restrictions related to COVID-19 appear to be a thing of the past, there is no doubt that COVID-19 infections and associated illness and treatment still have the potential to ruin or disrupt a holiday.
Therefore, whilst the initial pain of the COVID-19 disruption has eased, it is still an illness that gets special treatment under most travel insurance policies.
Will my travel insurance cover coronavirus?
The answer depends on the policy wording which is in place and the level of the cover which you have purchased.
Some travel insurance cover is for medical expenses only while other policies cover trip cancellation and other associated expenses. You will need to check what type of travel insurance cover you have by looking at your insurance policy, policy schedule, or other correspondence between yourself and your travel agent or insurer or by contacting your insurer directly.
Our review of two leading travel insurers
We have reviewed the travel insurance policies of two leading travel insurers; one policy which was purchased from the insurer directly (the “direct policy”) and another policy which is provided with a credit card from a major bank (the “credit card policy”).
This article seeks to highlight some of the issues which may arise when claiming on travel insurance policies for COVID-19.
Direct policy
When applying for the direct policy, it was necessary to elect that COVID-19 cover was required. Importantly, some countries require proof that you have travel insurance that covers medical treatment (and specifically coverage for COVID-19 treatment).
After the application for insurance with COVID-19 cover was made and accepted (as it was in this case), the policy provided unlimited cover for overseas medical expenses, including claims related to COVID, except for:
“claims arising from COVID-19 if the country or part of the country our policyholder travels to is subject to “Do not travel” advice on the smartravelller.gov.au website”.
Sensibly, the exclusion applies only if the “do not travel” advice was due to COVID and not if it was for other unrelated reasons.
Also, under the direct policy:
- there was a higher or special excess for claims for cancelled or amended travel plans due to contracting COVID when travelling; and
- cover for COVID-19 related cancellation is not covered under the basic plans, only under the more comprehensive (and expensive) plans.
It’s also worthwhile knowing that cancellation or amendment claims, no matter the cause, usually attract a lower maximum benefit payment or policy compared to other claims on the policy (eg for medical expenses (usually unlimited) and theft etc).
Credit card policy
The restrictions or exclusions related to COVID-19 claims were similar under the credit card policy.
Under that policy claims related to contracting COVID-19 are covered unless you contract COVID-19 on a cruise (a similar restriction also existed in the direct policy) or “do not travel” advice was in place for your destination due to COVID-19 (similar to the above limitation).
Otherwise, this policy did not contain any other COVID-19 related exclusions or limitations and was similar in this regard to the direct policy.
What does a “cancel for any reason” policy cover?
We recently checked a travel insurance policy for some clients (a direct policy in that case). The type of policy purchased prior to their holiday to Europe was described as a “cancel for any reason” travel insurance policy.
“Cancel for any reason” is a common name given to travel insurance products, however the name can be deceiving. In the case of this particular policy (and others), there are still exclusions on claims relating to cancelled travel.
For example:
We will not pay for claims caused by:
…
An epidemic, pandemic or outbreak of an infectious disease or any derivative or mutation of such viruses (or arising directly or indirectly from these) or the threat or perceived threat of any of these.
Epidemic means a:
Fast-spreading contagious or infectious disease or illness in an area as documented by a recognised public health authority.
Pandemic is defined as:
an Epidemic that is expected to affect an unusually large number of people or involves an extensive geographic area.
Based on the above definitions, it’s likely that claims for cancellation costs, where you have cancelled your trip due to an epidemic or a perceived threat of an epidemic, will not be covered under the policy. Importantly, the above exclusion does not appear to apply to claims payable under the policy for emergency overseas medical care.
There were similar exclusions in the credit card policy which we reviewed recently. However, in the case of the new credit card policy, it was clear that whilst pandemics/epidemic exclusions were in place, claims related to contracting COVID-19 were not excluded.
Is the term “cancel for any reason” misleading?
However, it might be said that advertising the policy as a “cancel for any reason” policy, could mislead consumers as to the effect of the policy which they’ve bought.
In such circumstances, a consumer may be able to challenge the decision of the insurer to decline the claim through the Australian Financial Complaints Authority (AFCA). AFCA has powers in considering a dispute, to look at the relevant legal principles, industry codes or guidance, previous AFCA (or FOS) determinations and importantly what constitutes “good industry practice”.
What if my policy does cover epidemics and pandemics, including COVID-19?
Most policies now cover claims related to contracting COVID-19 and associated treatment. But it is less common, albeit possible, that cancellation or amendment claims related to COVID-19 or other pandemics will be covered.
If you are unsure whether your travel insurance policy covers travel cancellation or other claims due to COVID-19, we recommend that you make direct enquiries with your insurer and read your PDS before you travel.
If you are not sure if you are entitled to claim, but think that you might be eligible, we recommend that you make a claim.
If the insurance claim is rejected, you can contact us and will review the rejection for free and give you advice on any possible appeals or next steps.
Get help
If you are unsure whether your travel insurance policy covers travel cancellation due to coronavirus, but you have decided to cancel your travel to avoid exposure to the virus anyway, we recommend that you still make a claim.
If the insurance claim is rejected, you can contact us and will review the rejection for free and give you advice on any possible appeals or next steps.
Contacting Berrill & Watson
📞 Melbourne: 03 9448 8048
📞 Brisbane: 07 3013 4300
📞 Anywhere else in Australia: 03 9448 8048
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