About nine months ago, the insurance world threw a surprise party for many travelers. “Surprise!” the insurers said. “You’re not covered for COVID-19.”
With travel insurance, the best surprise is no surprise. You need to know what you’re getting. But as the pandemic revealed, many policyholders had no idea what they were getting — or, more precisely, what they weren’t getting, which was money back, thanks to this strange new world.
Here are seven things you must know about your next travel insurance purchase. Please don’t shake your head and mutter, “I’m never buying that quackery again” until you finish reading this and know that:
1. If you paid for insurance and never got to take your trip, you might not be entitled to a refund of your premium.
“Technically, a travel insurance policy (specifically, a cancellation policy) begins being used the day it’s purchased,” said Megan Moncrief, chief marketing officer for Squaremouth, an insurance aggregator that compares policies from various providers.
“The insurance begins bearing that risk immediately, and the traveler has coverage starting almost immediately,” she said in an email. “So, for example, should (you) fall ill the next day and be prevented from traveling, that cancellation coverage is already in place.”
Some providers have been lenient, she said, noting that “when we see travel insurance providers refunding policies or providing a voucher for a future trip, they are doing so outside the standard insurance guidelines.”
Berkshire Hathaway Travel Protection is a bit different, Dean Sivley, its president, said in an email, in that it offers “a 15-day free-look period should purchasers decide they want to cancel the policy because it did not cover what they thought they were looking for.”
2. You must understand what trip cancellation insurance does and does not cover to be protected.
When you buy trip cancellation insurance, you might assume it covers anything that might happen. It doesn’t. That would, insurers say, make travel insurance unaffordable.
You also might think you can get your money back if you cancel because you’re too worried to travel. You won’t (unless you have “cancel for any reason” insurance). If you’re afraid, say, of snakes and there’s an infestation in the country you plan to visit, you can’t stay home and expect to be reimbursed.
Trip cancellation travel insurance “only covers cancellations for a list of reasons highlighted in your plan,” Rachel Coen, head of the communications team for G1G.com, a travel insurance provider, said in an email.
Did insurers have you covered when the pandemic broke out. No. How could they?
Still, many travelers thought they were covered. Wrong. “What they didn’t know was that their plan excluded (the) pandemic or it simply doesn’t cover travel advisories,” Coen said.
3. What is and isn’t covered by trip cancellation insurance will vary by provider, said Moncrief of Squaremouth.
Here are some events that may be covered by a standard trip cancellation policy: getting COVID-19; being exposed to COVID-19 and being required to quarantine; and needing to care for ill family members who have COVID-19.
Here are events that might not be covered by a standard trip cancellation policy: border closure; airlines or other transportation providers canceling because there are too few passengers; financial default of a transportation provider; and the expense of quarantine required at a destination. Again, it depends on the provider, which means you must read and understand your policy’s fine print.
4. Insurance for travel in a foreign country might be required by that country.
“This has become significantly more prevalent,” Coen of G1G said. If (a country knows) “that there is a chance that their medical resources will become taxed by tourism during the pandemic, they are going to require tourists to have travel insurance. Several countries are putting a lot of money into the health care of their citizens, so they again would want to receive payment if they do treat a tourist.”
Among the countries that now require insurance, Coen said: Costa Rica, Thailand, Cambodia, and Turks and Caicos.
The list continues to evolve, so check with your travel provider and the State Department’s page detailing COVID-19 country-specific information.
5. Standard policies might now cover COVID-19-created or -related issues.
But they still don’t protect you if you’re too afraid to travel, said Sivley of Berkshire Hathaway Travel Protection. “I’m not aware of any U.S. travel insurance provider covering for trip cancellation due to fear of COVID-19, unless the traveler had purchased cancel-for-any-reason coverage,” he said.
6. Cancel-for-any-reason, or CFAR, policies will protect some but not all of your vacation investment.
You’ll pay more for that peace-of-mind coverage, which is what it says it is, but you won’t get back your full investment.
Some companies have stopped selling CFAR, which, Sivley said, had been “a very small single-digit percentage of the travel insurance market.”
But those that do sell it? “We are seeing ... a huge spike in the cancel-for-any-reason upgrade,” upward of 500%, said Moncrief of Squaremouth, in part because it’s the “most lenient cancellation option” and gives “the biggest safety net.”
That CFAR net, she added, probably would cover the unexpected, including border closures that caught many travelers unawares.
7. A new type of insurance has been developed for the road trip, the most popular form of travel these days.
That’s the word from Sivley of Berkshire Hathaway. “We launched a new road-trip travel insurance plan, ExactCare Lite, to meet the needs of the evolving domestic traveler,” he said. “Our ... research indicates mature travelers — historically the demographic to purchase travel insurance most often — are sticking close to home, and ExactCare Lite is ideal for drive vacations,” which is all it covers.
Because travel providers now often ask for full payment upfront, even for road trips, such insurance can help you recoup out-of-pocket costs.
If all of this seems complicated, it is, perhaps more so because of the unknowns we’re facing. Last year, we wouldn’t have thought to ask whether the cost of a COVID-19 test now required by your destination, never mind the cost of any mandated quarantine, might be covered by insurance.
Travel is always an education, but these days, it helps to have an advanced degree in reading the fine print.