Satish Pandit, a 40-year-old banker, who travelled to Germany from India for a wedding in the first week of March is now in a fix. His return flight is delayed and he has been informed that his insurer will no longer be covering trip cancellations due to the novel coronavirus, or COVID-19, outbreak.
"I rescheduled my trip and tried to buy a travel policy. But now coronavirus is specifically excluded, so I will lose a lot of money in hotel stay and airfare," Pandit told Moneycontrol.
Individuals looking to buy travel insurance products for overseas travel, now need to check whether COVID-19 delays are covered or excluded. With non-essential travel being discouraged by the Indian government, insurance companies have also begun placing restrictions on certain countries.
Travel insurance covers come as cheap as Rs 450 for a five-day one with a sum assured of 50,000 euro. With a Schengen Visa, a travel insurance plan of a minimum 30,000 euro is mandatory.
Without travel insurance, almost Rs 2 lakh to 3 lakh can be lost due to flight cancellations as well, considering expenses like extended hotel stay and daily meals.
Why the restrictions?
The COVID-19 outbreak across the world has led to a spate of cancellations by airline companies in the wake of travel restrictions placed on individuals. Travel insurance covers, which would have otherwise covered postponement or cancellation of flights or hotel stay, could exclude coronavirus-related delays.
When it comes to India, the government has 'strongly advised' Indian nationals to refrain from travelling to China, Italy, Iran, Republic of Korea, Japan, France, Spain and Germany from March 13. Incoming Indian travellers from these locations would be quarantined at arrival for a minimum of 14 days.
This means that any connecting flight from the point of arrival to any other location in India can be taken only after the mandatory two-week quarantine. Trip cancellations/delays due to this could be a standard exclusion.
What will my travel insurance cover?
If you have already bought a travel insurance cover, the policy terms and conditions will be followed. But if you are looking to buy a new cover for travel to countries mentioned above, it could be excluded from coverage.
Domestic travel and trip delays within India as well as baggage loss claims will continue to be covered under the standard travel policies. Same goes for emergency medical expenses during travel. Any unforeseen health expenses incurred due to coronavirus or other health ailments will be covered.
"Since the government has advised against international travel, Indians still risking travel to COVID-19 nations in Asia, Europe and US will have to bear additional costs. Travel insurance may not be able to come to their rescue," said the head of distribution at a mid-size private general insurer.
Globally as well, insurers have either stopped offering travel insurance for the time-being or have specifically stated that disruptions due to COVID-19 will not be covered.
AXA UK said on its website that If you purchase a new policy now, it will not cover any trip cancellation or disruption in relation to coronavirus.
The insurer said that if you already have an annual multi-trip policy and you book a new trip now, you may not be covered in case of cancelation of that trip, or for any disruption you experience. The coronavirus exclusion only applies to cancellation or disruption claims.
However, medical costs due to emergency expenses will continue. AXA UK said it will continue to cover medical costs if customers become ill in a country or region that individuals haven't been advised against visiting.
How to check what is covered? Travelling internationally, especially during the coronavirus outbreak, necessitates buying travel insurance. First, the prospective customer needs to check the list of exclusions in the policy terms and conditions. If COVID-19 is mentioned in the exclusion list, there is no use of buying a travel cover since all your delay-related claims will then be rejected.
Insurers may not always mention the words 'coronavirus' or 'COVID-19'. Even words like infectious disease, pandemic or epidemic in the list of exclusions would mean that trip delays or cancellations due to this virus outbreak won't be covered.
Before the outbreak, most insurers did cover delays due to infectious disease.
There could also be cases where the insurer would have taken a decision to exclude certain countries from coverage, but have not updated the terms and conditions yet on its website. The best way would be to call up the customer services and get clarity on the updated exclusions list before buying a policy.
An advisory by a government in a particular country is as good as a mandate or ban during a pandemic outbreak like COVID-19. Even if you are not being banned from travel and make a leisure trip to an affected country, the cover could be automatically declared 'void' since you violated official instructions.
This is because insurance works on the concept of probability of risk. When there is certainty that an individual is exposing themselves to a potential risk by travel, he/she will not be offered insurance coverage.
While the best option right now would be to avoid any international travel, those individuals who cannot avoid travelling need to ensure that coronavirus is not excluded. Else, buying a travel cover makes no financial sense.
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