The global and domestic spread of COVID-19 has forced Canadians to reassess their upcoming travel plans – and insurers to assess their travel insurance claims. Weeks ago, airlines started canceling flights, businesses started to limit business travel, cities entered into states of emergency and the federal and provincial governments started closing borders to all non-essential travel. Many organizations offer travel insurance that will assist Canadian travelers mitigate their travel-related financial losses related to COVID-19. Here are three steps to help insurers assess travel insurance claims caused by COVID-19.
1. Identify the coverage source.
Canadians typically buy travel insurance through one of these three sources:
Direct. These include insurance brokers or brick-and-mortar travel agents that sell policies customized to the trip.
Riders. These include policies that add to basic insurance policies such as coverage afforded through an employer's group insurance provider.
Add-ons. This includes travel protection from an airline booking site or travel credit card perks and benefits.
2. Understand the coverage purchased.
Understanding what a travel insurance policy covers requires a careful reading of the policy wording. Consult the policy to determine what coverage was purchased. Travel insurance policies can be comprehensive or targeted to a particular type of coverage.
Comprehensive policies. Known by many names (such as trip cancellation, vacation and comprehensive trip insurance), comprehensive travel insurance provides coverage for multiple events in one insurance package, including cancellation, interruption, evacuation, lost/stolen luggage and interruption coverage. Larger organizations will likely have comprehensive policies that may cover employee travel necessitated by COVID-19, including delays and alternative travel arrangements.
Targeted policies. Targeted travel insurance includes limited coverage for travel, medical (which provides emergency coverage), lost/stolen luggage, prescription drugs or evacuation (to take the traveler to the nearest hospital or repatriate them). These policies are specific and narrow in scope, and are typically add-ons to other financial and travel products.
3. Evaluate the exclusions.
Depending on the wording of the policy, unless explicitly provided, travel insurance does not cover voluntary cancellations or changes made by the traveler. Travel insurance also might not cover foreseeable events. Since the World Health Organization declared the novel COVID-19 as a global pandemic, coverage may be limited through policy wording dealing with pre-existing risk. Further, policies sometimes have exclusions that apply to pandemics (as opposed to localized disease outbreaks) and travel subsequent to government advisories.
We recommend reviewing policy wordings, which may contain exclusions for medical expenses, pre-existing conditions or personal injury relating to contagion. Review claims to see if the cancelation of a trip is because of risks associated with COVID-19, and assess the facts accordingly. As the wider outbreak was known by February 2020, consider whether such an event was foreseeable at the time the traveler purchased the policy.
If you are looking for advice or support with insurance issues arising from COVID-19, McInnes Cooper can assist you with understanding and responding to these risks. We provide solutions to corporations, insurers, underwriters, and agents within the insurance industry.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
