Coronavirus scare puts travel insurance in focus

The Wuhan coronavirus appears to have the makings of a major outbreak. The Chinese government has placed the virus’s eponymous city of origin, which is home to 11 million people, on lockdown. The number of confirmed cases around the world has shot past 20,000, with more than 420 reported deaths. As of February 4, Canada’s tally 26 people under investigation in Ontario, and four confirmed cases nationwide.

With reports of infections pouring in from around the world, now is as crucial a time as ever for Canadian travelers to know their rights and obligations with respect to travel insurance coverage — many of which, in the case of calamitous events like virus outbreaks, turn on declarations from the Canadian government.

“Canadians should keep up-to-date with any travel advisories that are being issued by the Canadian government in relation to the virus, and specifically for their destination,” said Dan Keon, Vice President, Market Management at Allianz Global Assistance Canada. “The details and timing of these travel advisories as they’re released can affect travel insurance coverage.”

One example cited by Keon concerns trip cancellations. As of February 4, the government advisory urged Canadian travelers to “Avoid non-essential travel” to China, with a stronger warning to “Avoid all travel” to the province of Hubei, including the city of Wuhan. Those who made plans to fly to Wuhan and secured travel insurance before the advisory level was raised to that degree may be eligible to claim a trip cancellation benefit, assuming that’s included in their policy. But if the advisory was already in effect when they booked their flight and insurance, they shouldn’t expect to be eligible.

“Most plans allow you to cancel your trip and get reimbursed for a specific set of reasons, one of which may be that sort of untimely government advisory,” Keon said. “But what’s good right now is that it seems many airlines servicing the affected areas in China are offering options for refunds or transfers. Travelers may want to check with their airlines, as well as other routes outside their travel insurance, to see if they can recover some of their lost funds.”

As the majority of advisories relating to the coronavirus so far are focused on China, he said there has been no significant increase in claims compared to the overall volume of claims opened. He also noted that the 2003 outbreak of Severe Acute Respiratory Syndrome (SARS) coronavirus did not significantly affect coverage, though things can change if claims activity were to pick up to a high enough degree.

“There are so many factors that go into pricing, and the general likelihood of injury and illness goes far beyond the possibility of contracting the virus,” he said. “It’s more likely that a change in the overall experience of claims will impact rates before one specific event will.”

Another possible scenario, according to Keon, is that providers may respond to a significant rise in claims activity with a change in policy wording — an exclusion for any event related to a pandemic, for example. Such a provision is not uncommon, he emphasized, and typically depends on the spread of a virus being declared as a pandemic as opposed to just an outbreak, which relies on the word of an authority such as the World Health Organization (WHO) or a governing body. While the WHO has acknowledged that the spread of the novel coronavirus now constitutes a global emergency, it has not declared it a pandemic as of February 4.

While eligibility for regular trip cancellation coverage is subject to such nuances, Canadians may also consider getting travel insurance plans that have a “cancellation for any reason” provision, under which they would be eligible to make a claim even without a no-travel declaration from the government. But as Keon stressed, such coverage usually comes with slightly higher premiums and the right to partial rather than full reimbursement on pre-paid trip costs.

“Ideally, travelers should go over their policies in detail with a licensed broker of their insurance provider — particularly with respect to what types of coverage would fit their travel plans — before they depart,” he said. “They should also pay attention to the situation at their destination, the status of the virus as of the time of departure, and any travel advisories. Reviewing advice on health and safety precautions from trusted sources like the WHO can also be helpful.”

Since each policy will ultimately have different coverage and exclusions relating to the coronavirus, Keon also urged travelers to keep a copy of their policy on hand as they travel, as well as details on how to contact their provider. In case the worst happens, the first step is to quickly contact the provider, who can provide information on how to seek treatment and other forms of immediate assistance, as well as how the coverage would work given that the policy holder may or may not have the virus.

“If there’s a silver lining to events like this coronavirus scare, it’s that they tend to make travelers more aware of the need for insurance, and they open opportunities for brokers and insurance providers to open that discussion,” he said. “But ultimately, these events are a blip in the broader scheme of risks that people can encounter while travelling. So regardless of what’s in the headlines, Canadians who plan to travel should arrange to have travel medical insurance at minimum before they leave, with benefits such as trip cancellation, trip interruption, and baggage as well for full protection.”