Dentons

Generally and subject to the terms and conditions of the policy, travel insurance covers trip cancellation as well as medical fees incurred during the trip. The novel coronavirus (officially named COVID-19 by the World Health Organization (WHO) was detected in late 2019 and the outbreak has caused great concern for those travelling or returning from their trips in January and February 2020. With more and more travel restrictions being imposed around the globe, those who have made travel plans in advance may also be affected. The question everyone is now asking is: does my travel insurance cover any losses caused by COVID-19?

Standard travel insurance policies do not normally cover trip cancellation due to fear or general concerns resulting in a disinclination to travel as that relates to what might happen, not what has happened. In fact, it would be common for such policies to contain exclusions for known or foreseeable events or epidemics. In order to cancel a trip for any reason, travellers would need to purchase ‘cancel for any reason’ (CFAR) travel insurance, which is more expensive than the standard travel insurance but will allow the traveller who has purchased CFAR travel insurance to get a portion of the trip cost back upon cancellation (for any reason). However, even CFAR travel insurance will likely have similar general exclusion clauses for known or foreseeable events or epidemics.

To avoid disputes, many insurers have issued notices of the date which they consider the public to have been alerted to the dangers of the novel coronavirus, meaning the date on which this became a known event under the interpretation of their policies. The standard position is that losses resulting from events which were already known events at the time of purchase of the travel insurance would not be covered. This means that generally (and subject to the terms of the policy) losses associated with the novel coronavirus will not be covered if the policy is purchased after the health crisis becomes a known event according to the interpretation of the respective insurers.

If the policy has an exclusion for epidemics or public health emergency of international concern (PHEIC), then losses incurred before official declarations of PHEIC or epidemic may be covered, subject to the terms of the policy.

Following the outbreak of the Severe Acute Respiratory Syndrome (SARS) some 17 years ago, many insurers revised the wording of their policies to specifically exclude communicable diseases, in order to mitigate their potential exposure. However, unless the policy is clearly drafted, there may still be room for argument on the interpretation of the terms, in particular the exclusion clauses when dealing with claims involving the novel coronavirus.

All in all, coverage will be determined on a case by case basis and may depend on when the policy was purchased, the terms of the policy itself and whether travel advice from the government has been followed.

As a practical tip, it would be advisable to buy travel insurance sooner rather than later to avoid situations where it may be too late to do so after an event is classified as a known event under the policy. It is also important to always have details of your travel insurance policy with you when travelling. Do keep an eye out for notices published by your insurers in relation to the novel coronavirus so you are aware of some of the factors that will be considered by them. For example, some insurers have offered to refund or adjust the effective dates for purchased travel insurance to accommodate rescheduled dates of travel, subject to their terms and conditions.

For the present situation, some airlines have introduced special arrangements for passengers who meet certain criteria and have waived the relevant fees for change or cancellation of their flights. As such, travellers may wish to check with the airlines and hotels before turning to their insurers.

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