By Autumn Cafiero Giusti
In the past month the coronavirus outbreak has caused global travel disruption, with countries imposing travel restrictions and at least 73 airlines cancelling or limiting flights to China.
Besides ruining a vacation, these disruptions can have serious financial consequences. Consumers with upcoming travel plans may be wondering whether travel insurance will protect them in case they cancel their trip, become sick while abroad, or if their flight is grounded. The answer is: it’s complicated.
Cancellation coverage
Consumers may be surprised to learn that in the case of coronavirus, their travel policy likely won’t cover changed or cancelled flights.
Most travel insurance is designed to protect consumers in case they need to cancel a trip, lose belongings, or require medical attention. If an airline cancels a flight, reimbursing customers is generally the airline’s responsibility — not the insurer’s. The same goes for cruise lines, rail companies or any other transportation provider that cancels because of coronavirus, or any other reason.
Still, that doesn’t necessarily mean the transportation provider will cover all expenses. Airlines, for example, are not required to refund cancelled flights and may limit the extent of the reimbursement. Fare policies vary, so it’s a good idea for travelers to review them before booking a flight.
Travel insurance will cover consumers who have to cancel their trip for reasons including adverse weather, a natural disaster, jury duty, an act of terrorism, or the travel company going out of business. But it won’t protect travelers who cancel only because they are worried about the coronavirus.
Illness protection
The good news for consumers is that most policies will protect travelers who become sick while abroad. As long as the policy includes medical coverage, the traveler is protected should he or she require medical care, hospitalization, or a medical evacuation while in a foreign country.
This would apply to travelers who contract the virus or are quarantined. But the details of the policy matter.
For example, travelers should check to see if their policy is a primary or secondary payer. A secondary payment policy is designed to pay for costs that the traveler’s personal insurance does not cover. This may mean the traveler has to pay deductibles and co-pays out of pocket. A primary payment policy, however, serves as the first payer for any medical costs that arise.
Additionally, all policies have a maximum they will pay, and many also have deductibles and other limitations. Travelers should understand the limits of their coverage and their obligation.
Supplemental policies
Travelers may consider adding a separate health policy, or rider, to help fill the coverage gaps of a standard policy might exclude. Riders could extend coverage in case of injury, or for foreign medical care – although provisions for the latter are rare.
Riders are meant to provide coverage that’s missing from a primary policy. So, if a policy excludes coverage for dangerous activities such as bungee jumping, a traveler may be able to purchase a rider to extend coverage in case of injury.
However, in most cases, a standard travel policy is sufficient. There are several types of policies with different levels and coverage for all sorts of travel. Some policies may be specific to cruises, where it may become critical to evacuate to a hospital. Other policies are geared more toward adventure travel.
Reality check
The headlines may paint a scary picture of the coronavirus, but it helps for U.S. travelers to keep facts and figures in perspective.
As of early March 12, there have been more than 125,000 confirmed cases of coronavirus, according to the World Health Organization. There are some travel restrictions in place. Anyone who is going on a trip will need to check and consider carefully. The situation is fluid, of course, and nobody knows how this will play out. All travelers should give careful thought to their insurance coverage.
And, of course, a key is for travelers to take the time to understand their actual risk – and do their research to find a policy that covers what they need.
Autumn Cafiero Giusti is a contributor at insuranceQuotes.com, which publishes in-depth studies, data and analysis related to auto, home, health, life and business insurance. Based in New Orleans, Autumn is a veteran journalist who specializes in insurance and personal finance.